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THE RICARDIAN RENT THEORY 
IN EARLY AMERICAN ECONOMICS 



BY THE SAME AUTHOR 



INTRODUCTION TO ECONOMICS, 191 9 



THE RICARDIAN 
RENT THEORY 

IN EARLY 
AMERICAN ECONOMICS 



By 

JOHN ROSCOE TURNER, PH.D. 

Professor of Economics in New York University 

* With an Introduction by 
FRANK ALBERT FETTER,^ Ph.D., LL.D. 

Professor of Economics in Princeton Uni-versity 




THE NEW YORK UNIVERSITY PRESS 

JZ WAVERLY PLACE, NEW YORK CITY 
I92I 



Ur^ 



Copyright 1921, by 
The New Yoek Univbesitt Peess 



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THE NEW YORK UNIVERSITY PRESS 

COMMITTEE OF PtTBIilCATION 

Abthue Httntington Nason, Ph.D., Chairman 
Director of the Press 

Eaele Beownbll Babcock, Ph.D. _ 

Haeold Dicein-son Senior, M.D., Sc.D., P.K.C.S. 



KENNEBEC JOUENAL PEB6S, AUGUSTA, MAINE 



SFP17?3/ A 



INTRODUCTION 

BY 

FRANK ALBERT FETTER 

OF 

PRINCETON UNIVERSITY 



INTRODUCTION 

THE writings of the early American economists 
which are surveyed in this study have been 
strangely neglected by the later generations 
of American students. The article by Professor C. F. 
Dunbar, published in The North American Review in 
1876, is the only previous American essay purporting to 
treat the subject. But Dunbar's article consisted almost 
entirely of a description of American conditions as 
explaining what he declared to be the utter "sterility" 
of American economic literature. The brief portion in 
which he spoke of writers is hardly more than a cata- 
logue of names and titles compiled from previous re- 
views. Certainly in some cases, as Doctor Turner shows, 
and possibly in most, Dunbar was unacquainted with 
the originals. Even if he had read the books, he, as 
a representative of the classical school ^ (which he be- 
lieved had arrived at ultimate truths within the limits 
of its hypotheses), was not qualified to render a just 
estimate of the theories in question, however competent 
he was in the field of money and banking. 

Forty years have passed, and is it not indeed remark- 
able that our generation of economic students, so thor- 
oughly grounded otherwise in the world's literature of 
economics, should know little or nothing of these, our 
own, writers, and most of that little through Dunbar's 
superficial and condemnatory article or through chance 
and usually disparaging references in the writings of 
English economists? That the American economists of 

^ See his article in The Quarterly Journal of Economics, I, 1, 1886. 



viii THE RICARDIAN RENT THEORY 

the period preceding 1880 have been almost ignored in 
Europe is not remarkable, but that they should have 
been so forgotten and neglected by their own country- 
men since economic studies have been so zealously fos- 
tered in America, is indeed surprising. 

If we speculate upon an explanation of this neglect, 
two reasons suggest themselves. The first is the poor 
estimate of the learning and equipment of the early 
American economists in comparison with their English 
contemporaries; the second is the dominance of the 
Ricardian economics in America, especially after J. S. 
Mill's work gave it a new appeal and a new vogue among 
American readers. Perhaps these are but two aspects 
of the same reason. 

Doubtless the prevailing opinion is that, in the period 
from 1815 to 1870 (let us say), the development of eco- 
nomics in England was in the hands of men of good 
general and special education — trained economists, to use 
the modern term — whereas, it is thought, American 
writers of tliat time were ill-trained amateurs, publicists, 
and pamphleteers. We forget that there were in Eng- 
land at that time no "trained economists" whatever, such 
as we now understand by that term applied to men who 
prepare by long studies under competent teachers for 
an academic life-career. British economists were self- 
educated, having had the practical training, and retaining 
many of the pecuniary interests as well as prejudices 
of business men, as did Ricardo, Cobden, and Bright; 
or, having followed the life of a soldier, as Col. Torrens, 
or of a lawyer and politician, as Lord Lauderdale; or 
being occupied as government clerks as were James Mill 
(a licensed preacher) and J. S. Mill (most peculiarly 
trained by his father) ; and even when, by accident 
rather than by design, one of them came to be a "pro- 



INTRODUCTION ix 

fessor," he had been educated as Malthus, Jones, and 
Whately were, for the church, or as Nassau Senior, 
Longfield, McCulloch, and Cairnes, for the practice of 
the law. 

It must shake the preconceptions of many readers to 
compare with these typical examples of the English 
economists of that time, the American economists whose 
education and experience are carefully described in the 
following pages. These include graduates of nearly all 
the leading universities or colleges of that time in Eng- 
land and America — lawyers, business men, mathema- 
ticians, natural scientists, philosophers, men of wide 
travel and of varied experience in public and private 
affairs, a large proportion of them being college teachers. 
They would seem to have been quite as well — and as ill — 
fitted as were their English contemporaries, either to 
give a sound economic interpretation of their environ- 
ment or to deal with abstract principles. But after J. S. 
Mill had won for Ricardian economics its predominating 
place in American thought, that system, with all its 
unrecognized limitations of time, place, and logic, became 
the standard of economic science with which any inde- 
pendent thought upon our peculiar problems was meas- 
ured and found wanting. 

The time was not ripe for a re-examination of these 
opinions until the new era of criticism dating from the 
Seventies had slowly yielded some fruits in England and 
America. Partly this criticism was of a historical nature 
and tended to show the fallible, temporary, and local 
character of the Ricardian economics. That too, was 
seen to be of mortal nature like American economic 
opinion, and not an eternal verity. An article in The 
Fortnightly Review, October, 1880, by Cliffe Leslie, who 
recognized something of "perspicuity," novelty, and dis- 



X THE RICARDIAN RENT THEORY 

tinctiveness, and some small measure of relative worth 
in the American writings, was long the only result of 
this impulse so far as it concerns the present subject. 
The first American students who returned from Ger- 
many imbued with historical teachings, made slight 
beginnings at a re-examination of older doctrines; but, 
in most cases, their historical training was hardly more 
than a veneer over the groundwork of their Ricardian 
opinions earlier acquired at home. With all of its cul- 
tivation of the historical sense and of the ideas of his- 
torical relativity and continuity of doctrine, the first 
generation of mature economists thus trained has mostly 
been content to see these principles applied in explana- 
tion of the origin of the rent doctrine in England, with- 
out apparently permitting its faith in the logical com- 
pleteness of that doctrine to suffer the least shock. Mean- 
time, the earlier American material has lain almost un- 
touched and unworked. It was with this need and oppor- 
tunity in mind that, several years ago, I suggested the 
subject of this study to the author. 

Partly the newer criticism has been of an analytical 
and logical character, applying new and more rigid tests 
to old doctrines. It began with Jevons, Menger, and 
Clark (in The Philosophy of Wealth, 1884), and has 
been continued by many men in many lands. Probably 
nowhere in the world has it had so wide and deep an 
influence as here in America. In all the flowering of 
opinions and publications in the field of theory, there 
has been, to be sure, a tremendous waste of blossom; 
but the best fruitage is a small group of younger econo- 
mists with better critical methods of study, with clearer 
economic concepts as instruments of thought, with a 
more consistent scheme of terminology, and with a spirit 
of scholarship that is broader, less sectarian, and more 



INTRODUCTION xi 

detached from temporary interests when dealing with 
fundamental principles. 

"The present study is an outcome of this newer criti- 
cism as applied to the earlier economic writings. It is 
far from a full and perfect fruition, as the author recog- 
nizes, but it contains promise of larger returns in the 
future. The task undertaken was limited to one theme, 
the rent doctrine and its necessary implications in the 
theory of population and in the law of diminishing re- 
turns. The author has pursued his task with diligence 
and with affectionate interest through many libraries, 
until he has made it peculiarly his own. Most of the 
writers that he has studied had pronounced opinions on 
the political issues of their day; but the reader will seek 
in vain for any trace of partisanship in the following 
pages. The study seems to have been made with an 
eye single to the interpretation of the abstracter economic 
doctrines of that period, and the author knows neither 
Greek nor Trojan as respects the practical interests and 
influences that helped to shape these economic doctrines. 
The author employs, however, as instruments of analy- 
sis, certain concepts and terms found in the recent psy- 
chological economics ; for, without a new point of view 
and a new mode of attack, it would have been vain to 
take up the study of these discarded materials. One 
must have some thread in hand or be lost in the maze 
of confused opinions. 

The usual effect of the industrial environment upon 
the economic theory of that period in America, appears 
with striking clearness; even the exceptions, as pre- 
sented by Doctor Turner, are instructive. Few of the 
men whose opinions are reviewed had the slightest per- 
sonal connection with one another; and in few cases 
were they even acquainted with one another's writings. 



xii THE RICARDIAN RENT THEORY 

Yet, with an approach to unanimity, they came to the 
same conclusion on the population question, often, it is 
true, by reasoning that is palpably erroneous. They 
denied, with almost as close approach to unanimity, the 
"orthodox" contrast between land and capital in the 
sense of artificial agents (and again the exceptions are 
suggestive). They conceived of capital in terms of 
value in relation to investment, and of land as one of 
the kinds of material agents in which capital was in- 
vested. One after another, independently, various writ- 
ers came to this view, usually supposed to have been 
original with Carey and to have been confined to his 
school. Many of them held to this idea persistently, 
despite the influences of the English economic writings 
which were almost their sole literary guidance. These 
facts throw light, not less upon the relativity of the 
English than of the American economic theory of that 
era. 

At the period at which this study stops, the English 
classical system was reasserting its influence in America, 
and, in the alluring form which J. S. Mill gave it, was 
taking its dominating place in American collegiate in- 
struction. There it continued for half a century — and 
still in some measure continues — to exert its benumbing 
effects upon American economic thought. Vigorous new 
life-currents, however, began to stir with Francis A. 
Walker's dissent from the wage fund, and with his 
stimulating, though inconclusive, theory of profits. Then 
in turn came vital impulses of one kind or another from 
more recent authorities. A recent European critic, in 
a review of this active intellectual movement — a review 
most remarkable in its range and grasp of and insight 
into the literature — plainly told his European readers 
that America had become the new center of economic 
theory. ^ 



INTRODUCTION xiii 

Now the most notable impression left by Doctor 
Turner's study, perhaps, is that of a certain likeness 
between such of those earlier American opinions as 
were not mere echoes of Ricardianism, and the more 
recent American concepts and theories. True, it will 
not do to press the comparison in all directions and 
without limits (especially since, with changed conditions, 
the population doctrine has taken on a new form differ- 
ing from either of the older forms). But the likeness 
appears clear in the recognition of the conflict between 
individual and social interests (denial of the economic 
harmonies), in the attitude toward the theory of value, 
in the treatment of capital as an investment concept, 
and in the rejection of the twofold classification of mate- 
rial factors as land and artificial agents. Perhaps when 
some Americans recently have fondly supposed that they 
were discovering novel and original conceptions, they 
were but beginning to regain a little of that independ- 
ence of mind which once enabled the American econo- 
mists in their theorizing to look past conventional ideas 
and to catch, now and then, glimpses of the world of 
reality about them. 

It would, however, be a reproach to this generation 
if, with a superior equipment, it did not attain to some- 
thing more nearly ultimate in principles than did our 
more or less empirical forebears. Progress is not to be 
made by ignoring former opinions whether English or 
American, but by more thoroughly appreciating the 
truth and error in them when studying them with a new 
critical spirit, by the aid of recent biology and psychol- 
ogy, and in the light of the rich economic experience 
of the hundred years between 1815 and 1915. Doctor 
Turner's study fittingly appears after a century of the 

^ J. Schumpeter, in Jahrhuch fur Oesetzgebung, etc., 1910, 913. 



xiv THE RICARDIAN RENT THEORY 

Ricardian rent doctrine. As pioneer work in a part of 
an almost untouched field, it will be helpful to every 
economic student seriously striving to know "the God 
of things as they are." 

F. A. F. 
Princeton University. 



AUTHOR'S PREFACE 

STUDENTS of the history of economic thought 
have inexcusably neglected the early American 
economists. This neglect was a subject of fre- 
quent comment in the seminar of the professor under 
whom I majored, Dr. Frank A. Fetter. He encouraged 
me to make a study of their works, calling particular 
attention to their attitude toward Ricardian rent. Fol- 
lowing this suggestion, I read the life and works of 
these economists. I found them worthy, but without 
fame. I believed then, and now know, that no sys- 
tematic study has been made of their contributions. It 
is hoped that this essay, at least in part, may serve to 
reveal their merit to public attention. Although I was 
inadequately prepared for the task, this study was begun 
and completed while I was a graduate student. It is 
offered for publication precisely as when completed, now 
eight years ago, with the exception that a tedious sixty- 
page critique of Ricardo's rent doctrine for the most 
part is omitted. 

When the study was begun, I was fresh from a perusal 
of the writings of the late General Francis A. Walker, 
in which the reader was taught to believe that he who 
differs from Ricardo's rent "simply does not know what 
he is mouthing about." This faith was upset, however, 
while reading the works of that keen witted philosopher, 
economist, and statesman, George Tucker of Virginia. 
The new faith received from Tucker caused me to do 
battle against Ricardo, but my present judgment causes 
me to eliminate the greater part of this critique; for, 
while interesting to the author, it would prove tiresome 
for the reader. 



xvi THE RICARDIAN RENT THEORY 

The purpose of presenting Ricardo's views in the" 
beginning of the study is that they form a basis for the 
controversial arguments presented by the economists we 
shall study. To this end, a critical estimate of the essen- 
tial features of the theory will reveal its elements of 
strength and weakness, and will prepare the reader for 
a more analytical study of its content. The logician 
would doubtless know the theory first and hear the criti- 
cism last : the pedagogue would find it both helpful and 
interesting not to defer the criticism in order to open up 
the question by setting forth the essential issues involved. 

J. R. T. 

New York University, 
May, 1921. 



CONTENTS 

Introduction by Frank Ai^bert Fetter vii-xiv 

Author's Preface xv-xvi 

CHAPTER I 

INTRODUCTION: CRITIQUE OF THE RICARDIAN 

RENT 

English economics deduced from experience during war- 
American economics different from English — Mal-adjustment of 
productive factors — Ricardo's theory of value — Capital — Capital 
used in tv^^o senses — Rent not a cost — Proportionality — Capital- 
ization — The differential concept — Ricardo's statement of the 
law of diminishing returns — Extension of the law of diminish- 
ing returns — Ricardo's confused definition of rent — Rent a trans- 
fer of value — Rent a monopoly return — Rent an addition to 
national wealth — Relation of rent and tariff 3 

CHAPTER II 

THE EARLY NATIONAL ECONOMISTS: RAYMOND, 
EVERETT, AND PHILLIPS 

Raymond — Life — A national economist — Fundamental econom- 
ic concepts — Theory of population and criticism of Malthus — 
Rent obeys the law of supply and demand — Land is capital — 
Teaches historical increasing returns. 

Everett — Life — A national economist — Opponent of Malthus 
— The "new idea" — Teaches historical increasing returns. 

Phillips — Life — A national economist — Fundamental economic 
concepts — Upholds Gray's theory of population — Criticism of 
Ricardo's rent — Ricardo's one-cause method and Phillip's prac- 
tical method contrasted — Rent — Teaches historical increasing 
returns — Indebted to Dr. Franklin. 

Other early national economists : Due, Vail, Potter, Opdyke, 
Mathew Carey, Ware, Rae, and Colton 22 

CHAPTER III 

CLASSICAL ECONOMISTS: McVICKAR, COOPER, 
NEWMAN, WAYLAND, AND VETHAKE 

These writers were professors — Environment. 
McVickar — Life and writing — Upheld McCuIloch. 



xviii THE RICARDIAN RENT THEORY 

Cooper — Life and writings — Influence in the South — Answers 
Everett and defends Malthus — Rent a restatement of Ricardo. 

Newman — Life and writings — Follows in the lead of Adam 
Smith. 

Wayland — Life and writings — Fundamental economic con- 
cepts — The theory of population — Wage-fund doctrine — Upholds 
Ricardian rent. 

Vethake — Life and writings — Wages — "Tendency" and theory 
of population — Rent and the theory of diminishing returns. 

Marcius Wilson 50 

CHAPTER IV 
JACOB NEWTON CARDOZO 

Conflicting biographical references — An editor — Theory of 
population — Criticism of Ricardian rent — Rent and historical in- 
creasing returns 75 

' CHAPTER V 

GEORGE TUCKER 

Life and writings — An estimate of Ricardo — Fundamental eco- 
nomic concepts — A statistical study of population — Density of 
population and the rate of increase vary inversely — Ricardo's 
theory of wages criticized — Slavery cannot exist in an advanced 
stage of society — Land is capital — Profits — Tucker and Malthus 
had similar ideas on rent — Summary of chief arguments — Criti- 
cism of Ricardian rent — Rent and the theory of limited re- 
turns 83 

CHAPTER VI 

HENRY CHARLES CAREY 

Environment, career, and personal characteristics — Arguments 
against Malthusianism — Relationship of wealth, utility, capital, 
value, and cost of reproduction — -Two arguments on rent: (a) 
Land is capital; reijts grow propornonately less ; (b) The natural 
order of cultivation — Three possible interpretations of Carey 
on returns — An argument by the writer on interrelationships 
in the problem of proportionality — Carey and Ricardo on returns 
— Conclusion no 

.'IqpA^ER VII 

FRANCIS BO WEN 

Life and writings — A national economist — Assumptions — 
haissez faire — Fundamental economic concepts — Theory of pop- 



^ 



CONTENTS xix 

ulation and criticism of Malthus — Criticism of the Ricardian 
theory of rent — Rent and historical increasing returns 143 

CHAPTER VIII 

JOHN BASCOM AND AMASA WALKER 

Bascom — Life and writings — Theory of population — Rent — 
The law of diminishing returns in agriculture and increasing 
returns in manufactures. 

Wialker — Life — Political career — mercantile career — Objects to 
Malthusianism — Land is capital — Four elements of rent: (a) 
Location, (b) Difference in fertility, (c) Importations, (d) 
Permanent improvements — Differences between Walker and 
Ricardo on rent 159 

CHAPTER IX 

ARTHUR L. PERRY 

Life and writings — An estimate of Perry — Fundamental eco- 
nomic concepts — The theory of population — Land is capital — 
Rent and the law of historical diminishing returns 179 

CHAPTER X 

R&SUMB 

Wealth — Value — Capital — Population — Rent — Proportionality 
191 

BIBLIOGRAPHY 

203 



THE RICARDIAN RENT THEORY 
IN EARLY AMERICAN ECONOMICS 



CHAPTER I 

INTRODUCTION: CRITIQUE OF RICARDIAN 

RENT 

A WELL-ROUNDED study of the attitude of 
American economists toward the Ricardian the- 
ory of rent would call for more than a review 
of the expressions made by these economists; it would 
call for a consideration of the environment which was 
powerful in shaping their thought as well as for a deep 
appreciation of the major problems confronting them. 
Furthermore, the reader would profit little by studying 
a criticism of Ricardo's teachings unless he knew what 
it was that Ricardo taught. And he could not compre- 
hend Ricardo's thought unless he knew the industrial 
conditions in England during the first part of the nine- 
teenth century, for indeed it was from these conditions 
that his thought grew. 

Fortunately, however, Edwin Cannan and others have 
made familiar the circumstances which gave rise to the 
Ricardian teachings on over-popidation, diminishing re- 
turnSj and differential land-rent. Then too, the differen- 
tial theory of rent and the conclusions deduced there- 
from have been repeated to the point of tiresomeness. 
The language in which this theory was originally couched 
is familiar to every economist ; but it is only the language 
that is familiar, for there has never been agreement upon 
I the theory itself. 

"The early nineteenth-century English economists de- 
duced their doctrines, not from study of the works of 



4 THE RICARDIAN RENT THEORY 

their predecessors, but from the actual experience of 
England during the war." ^ The history of this experi- 
ence, as above indicated, has been told so frequently by 
others that I shall not repeat it here. It was the nature 
of this experience that gave the temper and tone to 
the writings of the British economists. But, on this side 
of the water, it was an entirely different type of experi- 
ence that gave rise to an entirely different type of eco- 
nomic thought. American writers regarded the Maltho- 
-Ricardian theory as an enemy of progress, and held it 
in contempt as a doctrine that would hail a famine as a 
deliverer and celebrate a pestilence as an occasion for 
a thanksgiving. The outlook of American economists 
was aggressive, versatile, and optimistic. No class was 
over-rich, nor was any class miserably poor. Novel 
conditions, both political and physical, were ours. 
Charged with the mission of subduing a new world, 
separated from the troubles of the old world by two 
oceans, and possessed of a new form of government, 
we had unique problems to face. If our development 
of economic thought was less rapid than that of the 
English, there is Httle wonder; for why should Ameri- 
5 cans strive to develop a science for the correction of ills 
that hardly existed ? Industrial ills furnished the motive 
for economic development in England: the insatiable 
desire for the increased production of wealth furnished 
the motive for economic development in the United 
States. Following these motives, it was but natural that 
reckonings on distribution should occupy a paramount 
place in the writings of the English. Likewise we should 
expect an economy of prosperity to be uppermost in 
American thought. 

1 Cannan, Theories of Production and Distribution, 148. 



CRITIQUE OF RICARDIAN RENT 5 

Furthermore, our institutions of learning neglected 
the development of this science. In our seminaries and 
colleges, excessive importance was given to the classics 
while little or no attention was given to the subject of 
political economy. The study of constitutional law and 
the interpretation of written instruments engaged the 
attention of public men. In the early part of the period 
we are to review, the currency and the tariff, and in 
the latter part, the anti-slavery agitation, absorbed pub- 
lic interest. The currency and the tariff became party 
issues, and were argued thru upon a political rather 
than upon an economic basis. The anti-slavery agitation 
produced its group of moralists, but none of these dis- 
putes developed economists. 

The English people were forced to conserve their 
natural resources. But it was literally true that, for 
Americans, to be saving of land and resources would be 
wasteful. We had an unbounded potential productivity 
in uncultivated lands, an untold supply of minerals and 
ores, millions of horse power in the form of unharnessed 
waterfalls, timber so plenteous that our people regarded 
trees as weeds, and innumerable other resources so 
abundant as to be termed free goods. At the same time, 
labor was so scarce and valuable that it could be eco- 
nomically employed only in those places where the re- 
turns would be largest. Not the conservation of natural 
resources, but the most effective utilization of labor, 
was the dictate of wisdom in this country. 

There was a mal-adjustment in the productive capac- 
ity of England in which natural resources was the short 
factor, whereas over-population made labor the long 
factor. This naturally led to low wages and high land- 
rents. In America, there was a mal-adjustment of 
productive capacity quite different from that found in 



6 THE RICARDIAN RENT THEORY 

England. Here labor was the short, and natural re- 
sources were the long factor. Naturally enough, land- 
rents were of little consequence, whereas wages were 
high and the labor problem was one of major importance. 

These differences in environment will in part explain 
the reasons for the different theories of rent held in 
the two countries. But, in further explanation of the 
variety of opinions contrary to Ricardo, we must look 
into his own theory of rent. I shall present this theory 
in critical form in order that the reader may have the 
essential points of controversy in mind. To comprehend 
the reasons for disagreement with Ricardian rent will 
best prepare the way for a study of the early American 
economists, for chief among their tasks was to defame 
the doctrine which made Ricardo famous. 

Ricardo approached the rent problem through a study 
of value. His view of the subject is familiarly expressed 
as "the labor-cost-of-production theory of value." He 
taught that the value of a good is proportional to the 
amount of labor employed in its production or to the 
wages paid for that labor. H your knife costs two days^ 
labor whereas my pen costs only one, it should follow 
that your knife would exchange for two such pens as 
mine. Value : value :: labor cost : labor cost. If the 
relative values of articles are proportional to labor-costs 
or wage-outlays, it is a mere truism that no other costs,, 
as rents or hires, can enter into value. If one accounts 
for the price of wheat by the labor-cost of producing it, 
one is forced to prove that other outlays as rents are,, 
in reality, not costs at all. So much for the theory which 
teaches that value is proportional to labor-cost or to the 
wages paid for that labor. - 

2 Ricardo's critics have put certain embarrassing questions: (1) 0n& 
finds a precious stone wortli |500. Is its value determined by its labor- 



CRITIQUE OF RICARDIAN RENT 7 

True or false, this theory of value enabled its author 
so to classify productive agents as to make rent a sur- 
plus return above labor-cost. The entrepreneur is hard 
to convince that wages form his only cost of doing 
business. He must pay for materials and pay numerous 
hires, rents, and fees. He asks, If cost determines price, 
why include only wage-costs and omit others of equal 
importance ? Questions of this nature were troublesome, 
and forced Ricardo to make the following classification 
of productive agents : 

(a) Land — so defined as to include all natural agents. 

(b) Capital — so defined as to include all artificial 
agents produced by labor. 

(c) Labor — human effort, be it mental or physical. 

According to the foregoing classification, capital con- 
sists of productive goods made by human labor. In other 
words, "capital is canned labor" — past labor having taken 
the form of present goods. Then, interest or the pay- 
ment for capital is a remuneration for past labor. Both 
wages and interest are thus outlays for labor. 

To this point, capital has been made to consist of 
productive goods — of tools, instruments, and machines 
created by labor and used to produce more wealth. Here 
again the Ricardian is in difficulty. The rent paid to 
the landlord is called a surplus gained without labor; 
yet, when he reinvests it in the form of capital, he is 
forced to define it as the product of labor. 

cost? No, for it has no such cost. (2) A monopoly artificially raises 
the price of a good. How is labor-cost responsible for the rise ? The 
answer is, in no sense. (3) Does the value of money depend upon 
its labor-cost? Ricardo himself answered in the negative. (4) Wine 
becomes better and sells for a higher price when allowed to age for 
a number of years. A sprout worth fifty cents grows through time into 
a tree worth a hundred dollars. What has labor-cost to do with the 
increase of prices caused by growth or improvement through time ? 
Labor-cost advocates regard these as mere exceptions to the "true theory." 
(5) How account for the value of labor itself? Another exception. (6) 
And does labor-cost determine the value of land, minerals, and other 
natural products? Again, no. 



8 THE RICARDIAN RENT THEORY 

Ricardo employed two meanings of capital : capital as 
tools, and capital as value. It is necessary to his argu- 
ment to prove that the returns on capital are uniform, in 
order that no surplus may arise from it. To prove that 
the per cent of return is uniform for all capital, he is 
forced to abandon the idea of capital as tools and shift 
to the idea of capital as value. If capital is conceived as 
value, competition will operate to maintain uniformity of 
returns. It is well known, for example, that if ten per 
cent is returned in the shoe business and only five per 
cent in the hat business, capital will shift from the less 
to the more remunerative employment. Because capital 
tends toward a uniform competitive return, it earns no 
surplus. No surplus going to capital (canned labor), 
Ricardo tells us that all the interest on capital is a true 
labor-cost. 

The foregoing classification enabled him to treat rent 
as a surplus that forms no part of the cost of produc- 
tion. The entrepreneur spends money for labor, for 
agents created by labor, and for natural agents. But 
Ricardo tells us that cost determines value, and that the 
only cost is labor ; therefore, the money paid for the use 
of natural agents must be eliminated from cost. Call 
interest the wages of past labor, and wages the payment 
for present labor ; but the payment for the use of natural 
agents can not be termed wages since labor did not 
create such agents. He defined rent as the payment for 
the use of land (natural agents). He believed rent to 
be no part of cost; thought that it was a surplus over 
and above cost. If it is not an element of cost, it can 
have no bearing on price. How did he proceed to dem- 
onstrate the proposition that rent is not a cost ? 

If the different bushels of a supply of wheat are of 
uniform grade, they will sell for a uniform price in the 



CRITIQUE OF RICARDIAN RENT 9 

market. Like bushels of wheat in a market at a given 
time will sell at the same price. But the cost of pro- 
ducing the different bushels is not the same. Some may 
be produced on superior soil and near the market ; some 
may be grown on inferior soil and distant from the 
market; some are secured from the superior uses of 
land and others at or near the intensive margin. Costs 
vary, but the price is uniform. Which cost is it that 
determines the price? The greatest cost — that portion 
of the supply which is produced at the greatest cost — 
determines the price of every portion of the supply. 
But the greatest cost is at the intensive margin or upon 
the marginal land — the land barely worth cultivating. 
Such land, or land uses, is so inferior that no rent is 
paid for the use of it. Then if production at the greatest 
cost determines prices, and if this greatest cost takes 
place where no rent is paid, it must follow that rent 
does not enter into the cost that determines price. This 
thought was cogently expressed by Ricardo, "Corn is not 
high because a rent is paid, but a rent is paid because 
corn is high." 

Ricardo's theory of value, which required capital to 
be defined as "stored up labor," has been on the defensive 
from the moment it was first penned. His theory of 
rent, his distinction between land and capital, and his 
theory of distribution based upon this artificial distinc- 
tion, are the defense works of his labor-cost theory of 
value. 

As above indicated, Ricardo reached the conclusion 
that "rent does not enter into price." This conclusion 
together with his concept of uniform profits (wages 
for past labor) made it possible for him to deduce the 
proposition that the only true cost and determinant of 
values is that of labor employed at the margin of culti- 
vation where no rent is paid. 



10 THE RICARDIAN RENT THEORY 

Should it be demonstrated that rent does enter into 
cost, Ricardo's theory of distribution must fall. This 
demonstration is made if it can be shown that only- 
valuable land (or land uses) is cultivated; for valuable 
land always commands a rent and, therefore, rent would 
enter into cost. 

Cultivation extends to, but not beyond the "no-rent 
margin." Let us examine this statement; for, if it is 
true, it follows that only valuable land is cultivated. 
What is this margin? It is, in pure theory, a boundary 
line separating the land fit (valuable) for cultivation 
from the unfit (valueless). It is comparable to the line 
separating time into past and future. 

Beyond this land-margin, cultivation would occasion 
greater costs than income. Were the product of uses 
beyond the margin greater than the cost of harnessing 
them, they would, in consequence, yield a net return. 
They would be valuable, and, for this reason, command 
a rent. But this is contrary to the marginal concept. 
This thought is substantiated by two laws : proportional- 
ity and capitalization. 

The concept of proportionality has been the subject- 
matter of numerous contributions during the last thirty 
years; it has now passed out of the theoretical stage, 
and has become an established economic law. Its fa- 
miliarity to economists spreads the need of repeating it 
in full. 

A single agent is non-productive, and is valueless 
unless there are other factors to combine with it. An 
axe cannot cut wood, neither can a man — it takes the 
two combined, for the mutual interaction of agents lib- 
erates each the productive power in the other. Arid 
land produces nothing, and is valueless unless water is 
in prospect. Turn a river into the barren area, and 



CRITIQUE OF RICARDIAN RENT n 

the combination, land and water, becomes productive 
and valuable. Since neither factor alone could produce 
and because it requires mutual contact for each factor 
to liberate the productive capacity in the other, it fol- 
lows that the productive agent is a composite in nature 
and valued as a single unit. Does land make the water 
valuable? or does water make the land valuable? Each 
liberates the productive capacity in the other, and the 
two in one are valued. 

Consider a rich agricultural state like Minnesota with 
its many lakes and rivers. Is not water there, although 
utilized in production, a free good ? I answer that water 
in the lakes or rivers is free because it exists in such 
abundance as to render the short factor, land, incapable 
of liberating its productive capacity. Suppose now it 
were possible for the owner of a bonanza farm separ- 
ately to sell and remove the moisture from his farm. 
The water would not be free, but it would require the 
total value of the farm to buy it. If one thinks of the 
air as a separate thing, it is free ; but, were it integrated 
with the chemical qualities of the soil, the farmer would 
not have it permanently removed for a price less than 
the value of the farm. To harness a free agent and 
make it an integrated part of a composite productive 
agent is to make it valuable. A farm is more than land ; 
it is the combined productive qualities that grow a crop. 

Thus we see that proportionality is a physical law 
having to do with so adjusting things that they, in obedi- 
ence to natural laws, will give off the means of gratify- 
ing desires. Man makes the adjustments, however; and 
the motive by which he is directed is that of securing 
a valuable return. No effort is wasted by man to harness 
an agent that is without promise of a valuable return. 
The conclusion follows that, except for miscalculation 



12 THE RICARDIAN RENT THEORY 

and poor judgment, all cultivated land yields a net re- 
turn, is valuable, and, therefore, commands a rent. 

The writer has in mind an investment of $ioo,ooa 
made in the fruitless attempt to convert a seemingly- 
bottomless svi^amp into productive soil. The venture 
failed and the money w^as lost because there was no 
productivity in the situation to exploit. A composite 
agent is valueless w^hen one of the essential factors is 
unproductive. Suppose that this swamp had responded 
to good treatment, that the composite agent (the land, 
the capital expended and embodied in its improvement, 
together with the other essential factors) had produced 
an annual net yield of $10,000. This capitalized at five 
per cent would give a capital value of $200,000. This 
yield could not be subdivided and the different portions 
of it attributed to the different factors in the composite 
agent. Specific productivity is not a generally accepted 
theory. One can no more attribute the value of the 
product to one factor in the composite agent than he 
could attribute music to the piano exclusive of the pian- 
ist, or sound to the clapper exclusive of the bell, or 
walking to the right foot exclusive of the left. But 
why will a man farm except for a yield? And if yield 
there be, its value is reflected, without exclusion, to 
the factors which compose the farm, the integrated 
agent of production. The process of capitalization is 
such as to make all land under cultivation valuable, and, 
therefore, rent-bearing. But if only rent-bearing land 
is cultivated, rent must enter into cost, Avith the conse- 
quence that the labor-cost theory of value falls. 

We shall see, later on, that almost all of the Ameri- 
can economists had the view that rent enters into cost. 
With this thought in mind, naturally enough they could 
not see why a tax on rent could not be shifted. To 



CRITIQUE OF RICARDIAN RENT 13 

recognize rent as an element in the cost of production 
is to take the premise from under Ricardo's deduction 
of a non-shifting land-tax. 

Throughout the following pages, we shall find other 
difficulties which our writers encountered in their criti- 
cism of Ricardo. Among these, it should be kept in 
mind that Ricardo's theory of rent was static, whereas 
American economists took a dynamic point of view. 
What is more, Ricardo approached the determination of 
price from the margin, whereas almost all American 
economists thought that the no-rent margin was deter- 
mined by the price of the product. They reasoned that 
the margin is price-determined rather than price-deter- 
mining. 

Again Ricardo's well known formula makes differ- 
ences in land a cause of rent ; but the principle of cap- 
italization enables us to argue that difference in fertil- 
ity is not a cause, but only a measure of rent. Rent 
in the competitive market, as above shown, is paid for 
all land under cultivation. Moreover, rents come to 
equality in the sense of equal price for equal service. 
Paying rent is but buying the productive services of 
agents. A rent of $100 for the superior acre which 
yields 100 units of service, is equal per unit of service 
to the rent of $5 paid for the inferior acre which yields 
only 5 units of service. These rents are equal in the 
same sense that the price of 5c for one loaf is not higher 
than the price of $1 for twenty loaves. Competition 
renders equal land-uses equal in price. And the price 
paid for the uses of land is as much a cost to the entre- 
preneur as is the price paid for the services of labor. 
From the best to the poorest land, rent enters uniformly 
into cost. 

Regarding capital as uniform, Ricardo limited the dif- 



14 THE RICARDIAN RENT THEORY 

ferential concept to land. We shall find that not a few 
of the writers we shall study made a severe attack 
against him at this point. At a latQj: date than we shall 
review, Francis A. Walker, though a defender of Ricar- 
dian rent, recognized differences among men, and made 
these the basis for his theory of differential profits. 
Recent authors — notably Hobson, Clark, Cannan, Fetter, 
and Davenport — see that the differential idea applies 
with equal force to the artificial agencies of production 
as it does to labor and land. ^ 

Akin to his differential was Ricardo's treatment of 
the law of diminishing returns, which, despite its im- 
perfections, was a real contribution. Turgot had nar- 
rowly conceived this law. * Cannan believes that Malthus 
did not make use of this law in the first and second 
editions of his essay on population. But, I ask, is not 
the very essence of the orthodox concept of diminish- 
ing returns contained in Malthus' arithmetical and geo- 
metrical ratios? The doctrine of the pressure of popu- 
lation on the means of subsistence, has no basis if it is 
not the disadvantage which attends the attempt to extort 
a greater and still greater crop from the soil. Ricardo 
himself does not give the law a better statement than 
is found in Sir Edward West's Essay on the Application 
of Capital to Land (1815).^ But to connect this law 
with the problems of rent, profits, and wages, and to 
weave it into a general system of distribution was left 
for Ricardo. The recent extension of this law to other 

* Walker, Political Econ., Part IV, chap. IV. Also Hobson, The Law 
of the Three Bents, Quar. Joum. Econ., V, 263-288, Apr., 1891; Clark, 
Distribution as Determined by a Law of Rent, Quar. Jovt/m. Econ., V, 
289-318, Apr., 1891; Cannan, The Origin of the Law of Diminishing 
Returns, Econ. Jour., 11, 53-69, 1892; Fetter, The Passing of the 
Old Rent Concept, Quar. Joum-. Econ., XV, 416-455, May, 1901 ; and 
Fetter, The Relation Between Rent and Interest, Amer. Econ. Ass'n., 
1904, third series. 176-198. 

* Cannan, Theory of Production and Dtifrihution, 147-148. 
^West, Essay on the Application of Capital to Land, 9-27. 



CRITIQUE OF RICARDIAN RENT 15 

productive factors, though the method of reasoning and 
the definition of the law be modified, has furthered the 
work which Ricardo began. This law, to Ricardo, was 
a principle of resistance ; and, to him, cost was the over- 
coming of resistance. This principle is related to value 
since, because of resistance, supply is limited. 

Ricardo's thought was that land obeys the law of 
diminishing returns whereas other agents do not. This 
statement, it should be said, has been denied for the most 
part by later economists. Almost all economists now 
observe that, should any productive agent cease to obey 
the law of diminishing returns, it would lose the element 
of scarcity and become a free good. 

It is true that, in the beginning of his work, Ricardo 
doubly emphasized the point that the law of diminish- 
ing returns is associated only with the original and inde- 
structible qualities of the soil. ^ He reckoned as capital 
all the investments on the land such as hedges, fences, 
manure, and other improvements. But Ricardo himself 
was led to give up a classification so artificial as this. 
He abandoned the classification in these words : "As a 
part of this capital, when once expended in the improve- 
ment of a farm, is inseparably amalgamated with the 
land, and tends to increase its productive powers, the 
remuneration paid to the landlord for its use is strictly 
of the nature of rent, and is subject to all the laws of 
rent." ^ 

Thus we see that Ricardo himself came to give a 
more extensive application to the law of rent than later 
writers have given him credit for. 

The different points of view found throughout Ri- 
cardo's treatment have made his followers uncertain as 

' Ricardo, Principles, 46. 

' See foot-note, Principles, pages 246-247. 



l6 THE RICARDIAN RENT THEORY 

to vv^hat Ricardo meant by rent, and these critics have 
been at still greater variance relative to the conclusions 
deduced from his definition. ® 

His formal definition reads : "Rent is that portion 
of the produce of the earth, which is paid to the land- 
lord for the use of the original and indestructible powers 
of the soil." ^ This definition is based upon the idea 
that rent is a contractual payment made by one person 
to another for the use of the land as such. Again he 
says, "For rent is always the difference between the 
produce obtained by the employment of two equal quan- 
tities of capital and labor." ^<> In this definition, it is 
not certain whether rent is a contractual payment or 
whether it might not be the produce obtained in case 
the landlord tilled his own soil. Nor are we sure but 
that rent might be a remuneration for the use of capital 
and of labor. 

The author employs many expressions which would 
lead us to believe that a rent is paid for capital; the 
following is illustrative : "The capital last employed pays 
no rent." ^^ 

Chapter II of his Principles is devoted to rent; and 
the reader cannot be mistaken in the fact that, through- 
out that chapter, Ricardo had commodity-rent rather 
than money-rent in mind. It is probable that the im- 
poverished state of the people in England at the time 

8 Professor Sidgwick says, "The Ricardian theory of rent combines, 
in a somewhat confusing way, at least three distinct theories, resting 
on different kinds of evidence, and relating to different and not necessar- 
ily connected inquiries: we may distinguish them as (1) a historical 
theory as to the origin of rent, (2) a statistical theory of the economic 
forces tending to determine rent at the present time, and (3) a dynamical 
theory of the causes continually tending to increase rent, as wealth and 
population increase." Principles of Political Economy, 286. Here Pro- 
fessor Sidgwick seems to have mistaken Ricardo's description of rent 
for his theory of rent. Views like Professor Sidgwick' s are continually 
appearing m the economic writings we are to review. 

9 Ricardo, Principles, 44. He should have said "uses above the mar- 
gin. The powers of the soil are not indestructible. 

^°Ih., 48. "/&., 49. 



CRITIQUE OF RICARDIAN RENT 17 

when Ricardo prepared this chapter is responsible for 
the emphasis which he placed upon commodity-returns 
and corn-rent. Later on, however, when he was prepar- 
ing his Chapter XXIV {The Doctrine of Adam Smith 
Concerning the Rent of Land), a different emphasis was 
given to the subject. He was there concerned largely 
with the distribution of wealth. Desiring to prove that 
the interest of the landlord is opposite to the interest of 
the rest of the community, he had to keep uppermost in 
thought the idea of contract rent payable in terms of 
money. A careful reading of this chapter, however, 
shows much of shifting back and forth between the ideas 
of money-rent and corn-rent. 

When he reaches Chapter XXXII (Mr. Malthiis' 
Opinions on Rent), we find Ricardo championing the 
cause of the people against the forceful arguments of 
Malthus, the chief defender of the landlord class. This 
chapter contains a reply to Malthus' pamphlet of 1815 
on The Nature and Progress of Rent. Malthus looked 
upon rent as an addition to national wealth. Ricardo 
could overcome this point of view only by treating rent 
as a transfer of value from one person to another. And 
so he here shapes his definition to fit the point he would 
make. ^- 

Chapter II of his Political Economy contains his analy- 
sis of rent ; Chapter XXIV on Adam Smith, is an indict- 
ment of the landlord class showing their interests to 
be opposed to those of the rest of the community; and 
the chapter on Malthus, Chapter XXXII, is an argu- 
ment to overcome the champion of the landlord class. 
In the chapter on Rent, we find Ricardo the scientist; 
in the chapter on Malthus, we find Ricardo the debater. 

12 Ricardo, Principles, 393. See Letters of D. Ricardo to R. Tower. 
113-114. 



l8 THE RICARDIAN RENT THEORY 

It was necessary for him to shift from commodity- 
returns to money-rent in order to make his case against 
the landlord class. 

The students of Ricardo furthermore have had diffi- 
culty in determining whether rent is to be regarded as 
a monopoly-return or a competitive return. In the sec- 
ond chapter of his work, it is clear that rent is an out- 
growth of competitive conditions. But, throughout the 
latter part of his study, he states specifically more than 
once that rent is to be regarded as a monopoly-return. ^^ 

Ricardo's definition is at one time to be interpreted 
from the individual's point of view, at another time 
from the national point of view; at one time it refers 
to corn-rent, and another time to money-rent; at one 
time it means pure land-rent, at another time mixed cap- 
ital and land-rent ; at one time it signifies monopoly- 
returns, and at another time competitive returns. It 
supplies a basis for such a variety of arguments and 
conflicting conclusions that we cannot wonder why hard- 
ly any two writers, whether they be disciples or oppo- 
nents, can agree on the Ricardian theory of rent. One 
disciple of Ricardo claims, in harmony with some of 
Ricardo's teachings on rent, that the progress of one 
class means the poverty of another;^* a critic, ^^ who 
even styles himself the "Ricardian of the Ricardians," 
with equal fidelity to Ricardo denies this doctrine while 
basing his arguments also upon the Ricardian theory of 
rent. The truth is that Ricardo had no clear conception 
of rent, and that he shifted from one concept to another 
as it became convenient in the different parts of his 
study. 

Does rent add to the wealth of a nation? Certainly 

18 Ricardo, Principles, 234, 235, 268. 
^* George, Progress and Poverty. 
1^ Walker, Land and its Rent. 



CRITIQUE OF RICARDIAN RENT 19 

from the above variations in view-point, the author gives 
us ground for drawing a choice of conclusions. Note 
particularly the following remarks : "Rent then is a 
creation of value, but not a creation of wealth; it adds 
nothing to the resources of a country, it does not enable 
it to maintain fleets and armies ; for the country would 
have a greater disposable fund if its land were of a bet- 
ter quality, and it could employ the same capital without 
generating a rent." ^^ Certainly the conclusion from this 
would be that rent is a mere transfer of value which 
adds nothing to national wealth. 

If we turn from his attack upon the landlords to his 
comment upon the niggardliness of nature, his thought 
is upon the social distress and upon returns of product 
rather than of value. Here he remarks, "Whether the 
proprietor of the land, or any other person, cultivate 
No. I, these ten quarters would equally constitute 
rent."^^ Since rent is composed of products, and pro- 
ducts are wealth, it follows that rent adds to national 
wealth. This distinction is very important in that the 
question of tariff in both England and America was 
largely influenced by it. 

The different opinions held by Ricardo and Malthus 
as to whether or not rent adds to the national wealth 
made Malthus a protectionist and Ricardo an advocate 
of the freedom of international trade. 

American economists have placed much emphasis 
upon the relationship between rent and the tariff; indeed, 
prior to 1880, American economics was little more than 
a by-product of considerations on the tariff. On the 
whole, protectionists have contested the Ricardian rent- 
doctrine, while free traders have accepted it. Profits 
was Ricardo's starting point in his argument against 

10 Ricardo, Principles, 394. "7b., 48. 



20 THE RICARDIAN RENT THEORY 

tarifif, and his one rate of profits was determined princi- 
pally by agricultural capital which usually found the 
most unproductive investment. Restrict foreign corn, 
and the growth of population will force the cultivation 
of land at lower margins. The consequent high prices, 
he thinks, enable the landlord class to reap the benefits 
of high rents at the expense of wages and profits. It 
has been said that, "The Ricardian theory of rent was 
admirably suited and was meant for the practical pur- 
pose of attacking the Corn Laws and abolishing the 
protective duty on the importation of corn." ^^ Professor 
Cannan, among others, is inclined to this view. 

According to Ricardo's static economics, rent is large- 
ly a monopoly-return. His variety of definitions of rent 
may be classified as surplus value, surplus produce, and 
contract-rent. Ricardo was primarily interested in 
profits ; according to him, rent and profits move in oppo- 
site directions. Profits and the land-margin decline to- 
gether ; rents and prices mount higher because of declin- 
ing profits and land-margins. The importation of corn 
would maintain higher land-margins and higher profits, 
but lower prices and lower rents. This theory seemed 
to prove that the interests of capitalists, manufacturers, 
and city dwellers were contrary to the interests of the 
landlords. Non-agricultural classes would profit by a 
removal of the tariff; landlords would suffer by a re- 
moval of the tariff. Here Ricardo seems to be in a 
dilemma; restrictions on corn will be removed or they 
will not be removed ; if they are removed the landlord 
class will suffer, if they are not removed other classes 
will suffer. In any case, a large portion of the popula- 
tion must lose. 

It took two shifts in thought for Ricardo to get out 

^^ Devas, Political Economy, 286. 



CRITIQUE OF RICARDIAN RENT 21 

of this perplexity. First, he shifted from the welfare 
of a class to the welfare of the nation. Second, he 
shifted his definition from commodity-rent to money- 
rent. By reason of this shift, he could make his case 
against the landlord class and substantiate his argument 
for a removal of the tariff. Of the items — money-in- 
come to the landlord, money-outgo of the farmer, and 
produce from the land — the first two mutually cancel, 
and leave the third, produce, as the real contribution to 
the sum total of income. 



CHAPTER II 

THE EARLY NATIONAL ECONOMISTS- 
RAYMOND, EVERETT, AND PHILLIPS 

THE purpose of the preceding chapter was to 
prepare the way for a study of the early 
American economists. This chapter will be- 
gin with a study of Daniel Raymond (1786-1849) be- 
cause he was the first American to write a book on 
political economy. ^ He was born and educated in Con- 
necticut. After being graduated from the Tapping 
Reeve School of Law at Litchfield, Connecticut, he 
moved to the city of Baltimore where he began the 
practice of the law in the year 1814. Throughout his 
career, Raymond was a strong opponent of slavery, an 
able nationalist, a scientific protectionist, and, contrary 
to the then prevailing American ideas, he opposed "lais- 
sez faire" in the broad sense of that term. H. J. Furber 
says that Raymond had the dislike for England which 
was so common in this country at that time. ^ Cossa 
goes so far as to claim that Raymond's works were partly 
inspired by his animosity against England. But this is 
a mere statement devoid of proof ; for, indeed, there 
is nothing in Raymond's writings to warrant it. 

1 ThougMs on Political Economy. In two parts. Baltimore, 1820. 
The second edition was titled The Elements of Political Economy. In 
two parts. Baltimore, 1823. He put forth a third edition in 1836, 
and a fourth edition in 1840. The work received much unfavorable 
criticism; cf. Dr. C. F. Gray, North American Review, April 1821: 
The Richviond Inquirer, Richmond, Va., in the following issues of 1825, 
July 1, August 26. 30, September 6, 9, October 13, and December 6. 
In these articles, W. G. Giles is most unfair, inaccurate in quotation, 
and abiisive. He tries to make Raymond out a fanatic. He would 
convey the impression that the book is partisan. Expressions like "Messrs. 
Daniel Raymond, John Quincy Adajns, and Henry Clay as an Affiliated 
Triumvirate in the elements of Political Economy," are characteristic. 



DANIEL RAYMOND 23 

At the time Raymond wrote his book (1820), several 
European texts were in use on this side of the Atlantic. 
No particular interest was taken in the fundamental 
laws of political economy; yet these works were exten- 
sively read for their bearing on the paramount political 
issue of the time — the tariff problem. Both political and 
industrial conditions forced this problem to the fore. 

Raymond's interest in the tariff determined the nature 
of his book, which was a thoughtful presentation of 
the subtler principles of protective duties in opposition 
to the economic theories developed in England. He 
taught that national productive capacity results from 
the harmonious development of agriculture and manu- 
facture. This proposition and its development was Ray- 
mond's contribution. His concept of "capacity," to- 
gether with his definition and development of the idea, 
differed materially from that of James Steuart and of 
Lord Laviderdale. We are spared the need of contro- 
verting M. E. Hirst's claim to the contrary. ^ He gave 

I cannot agree with the opinion of A. L. Perry that Raymond is a 
follower of Adam Smith (Political Economy, 81). C. P. Neill's "Daniel 
Raymond" is the only reliable work on Raymond. Mr. Neill's study is 
confined largely to Raymond's main thesis. He gives no discussion on 
rent, which was only incidentally considered by Raymond. See Neill's 
Chap. II. "Daniel Raymond and His Work." In Chapter IV, Mr. 
Neill quotes in parallel columns from Raymond's book and from F. List's 
works which appeared several years later. It seems quite evident that 
List was indebted to Raymond. This throws some light on the erroneous 
contention that H. C. Carey was indebted to List on the question of 
protection. Both Carey and List were indebted to the same American 
sources on this question. Raymond's work had a few enthusiastic friends; 
NUes' Register, December 16, 1820; Blackwood's Magazine, XVII, 200. 
John Adams and Mathew Carey waxed enthusiastic over the work (Neill's 
chapter II). General characteristics of Raymond's work were: as a 
national economy, political and economic entities were considered co- 
extensive; individualistic philosophy was opposed; legal and moral con- 
siderations overshadowed economic principes. His was a political econ- 
omy. His main thesis was national wealth as capacity for production 
in opposition to individual wealth as the possession of commodities. The 
purpose of his work was "to break loose from the fetters of foreign 
authority; from foreign theories and systems of political economy, which 
from the dissimilarity in the nature of the governments, renders them 
altogether unsuited to our country." {Political Economy, first ed., pref., 
v-vi.) 

" Furber, Oeschichte der Oekonomiachen Theorien in Amerika, 58. 

3 Hirst, The Life of Friedrich List, 112. 



24 



THE RICARDIAN RENT THEORY 



little attention to a theory of distribution, for his primary- 
interest was in the development of an economics of pros- 
perity which looked toward the development of our 
national productive capacity. Unbounded resources were 
ours, and he viewed protection as the agency for the 
development of manufactures. 

Our people had too recently won their independence 
from the exploitation of the English government for 
an idea of strong centralization and governmental inter- 
ference, such as he advocated, to meet with general ap- 
proval. His condemnation of slavery was not short of 
insulting to a large section of the country. His work 
had few friends and a small sale. 

Raymond, as above indicated, recognized the nation 
as an organic unit. He objected to Adam Smith's indi- 
vidualistic economy, and insisted that the interests of 
individuals or classes were often opposed to the national 
interest. In his thought, it is capacity for acquiring the 
necessities and conveniences of life, and not existing 
commodities, which constitute the real wealth of a 
nation. * The province of political economy is not, he 
thinks, to study how individual classes may secure or 
augment wealth and value. ^ The field of political econ- 
omy is, according to him, confined to a study of how 
the greatest productivity of a nation may be secured 
through legislation. ® Naturally, then, this writer gave 

* Raymond, Political Economy, 4th ed., 81. Raymond's ideas of na- 
tional restriction struck a sympathetic chord in Mathew Carey, which 
is evidenced by the fact that he wanted to endow a chair of political 
economy in the University of Maryland on condition that Raymond be 
allowed to fill it: 

"Philadelphia, Jan. 12, 1822. Know all men by these presents, that 
I do hereby bind myself to pay the University of Maryland, the sum of 
500 dollars, as one year's sa'arj^ for a Professor of Political Economy, 
and also to continue the subscription, unless I shall give six months' 
previous notice of my determination to discontinue the same. (signed) 
Mathew Carey." Biographical Sketches, 93-94. The very interesting 
correspondence between Raymond and Carey regarding the professorship 
in question will be found in the Biographical Sketches, 94-96. 

S/&.J 84. «/?>., 116. 



DANIEL RAYMOND 2$ 

little attention to the laws which govern the distribution 
of income. There were four editions of his work; the 
first and fourth editions gave no discussion of rent, 
wages, profits, and interest. Despite this he made a bold 
stand against the Maltho-Ricardian doctrine. 

Raymond's positive views were briefly expressed on 
the population-rent problem. He said, "Malthus' theory 
of population is certainly ingenious and plausible, al- 
though it is calculated to leave very erroneous impres- 
sions on the mind of the reader, in consequence of his 
not having treated the subject in conjunction with others, 
with which it is necessarily connected." ^ Raymond 
thought that pride and the innate feeling of independence 
make untrue Malthus' claim that almshouses and public 
aid will cause an increase of population. * He claimed 
that not over-population but a faulty distribution was 
the cause of poverty in England : 

When the tendency of a system of laws is to throw all the 
property into the hands of a few, the inevitable consequence, 
in a state of refinement in arts and civilization, will be to 
reduce the remaining portion of the nation to such a state of 
poverty and dependence as will subject them to all the horrors 
of famine, upon every fluctuation in the demand for their labor, 
however abundant the necessaries of life may be in the country, 
and unless there are countervailing laws, which shall compel 
such a distribution of food as will prevent starvation. It mat- 
ters not how abundant food may be, if it all belongs to a small 
portion of the nation, and the rest of the nation has nothing 
to buy it with ; a large portion will be left to starve, unless 
some provision is made by law for the distribution of it among 
the poor. Private charity is not adequate to prevent such a 
catastrophe. ^ 

This artificial or legal expression is characteristic of 
Raymond. It should be remembered that he was not 
a professional economist but a professional lawyer. Ar- 
guments legal and theological in nature so pervaded his 

'!&., 2nd ed., II, 67. ^ lb., 80. 

" Raymond, Political Economy, 2nd ed., II, 74-75. 



26 THE RICARDIAN RENT THEORY 

reasoning that economic laws were often disregarded 
even in questions which were primarily of an economic 
nature. This observation holds particularly in his treat- 
ment of population. He teaches that God would not 
establish laws that would lead an increasing population 
to starvation. 

He thought that Malthusianism owed its great popu- 
larity to the rich. "It is," said he, "very convenient 
and very palatable for those who have all the property, 
to preach up the inutility of making provision for those 
who have none; and, with them, a theory of population, 
or a system of Political Economy, which establishes such 
a doctrine, would be likely to be very popular." ^^ Jar- 
rold had previously given a similar discussion on this 
point. ^^ Our author's radical suggestion for the elim- 
ination of poverty was to have all the property in the 
Kingdom, at least once in every generation, divided pro- 
portionately among the people. ^- 

The threefold division of productive factors into land, 
labor, and capital, Raymond disregarded. "That por- 
tion," he said, "which Adam Smith and Malthus call 
profits, is made up in part of rent, and in part of wages. 
What they call the profits of capital, is either rent or 
interest, and to avoid a multiplicity of distinctions, it 
had better be called rent than interest, if it be necessary 
to distinguish it from wages. But as such minute dis- 
tinctions are wholly unnecessary and useless, the better 
way is to divide the product of the land and labor, be- 
tween the owner of the land and the cultivator, and call 
one part rent, and the other wages." ^^ 

He treats the earth as the "source of all wealth," and 

^°Ib., 72. 

^^ Jarrold, Dissertation on Man, 314-362. 

^ Raymond, Political Economy, 2nd ed., II, 82. 

!*/&., I. 202-203. 



DANIEL RAYMOND 27 

labor as the "cause of all wealth." ^* He amalgamates 
machinery with the productive factor, man. ^^ These 
are basic principles with him, and make possible the divi- 
sion of all incomes into wages and rent. 

A theory of prosperity, as was Raymond's, is neces- 
sarily dynamic rather than static. Were desires reck- 
oned as static, it would follow that the development 
of machinery would greatly diminish the necessity for 
human exertion. But, said Raymond, "The wants of 
man are indefinite and unlimited, and as fast as he con- 
trives to supply one want with a less quantity of labor, 
another equally pressing want springs up to supply its 
place, and impose new necessity for labor." ^® 

The growth of desires for a greater variety and a 
superior quality of goods stimulates the development 
of productive capacity to supply these desires. Larger 
productive capacity enhances the demand for and the 
earnings of labor, thereby making necessary a larger 
population from which the supply of labor may be in- 
creased. 

He taught that w^ages were governed by the law of 
supply and demand, but that, in a developing society, 
the demand for labor exceeds the supply, so that wages 
gradually increase. Treating labor as the cause of all 
wealth, and minimizing the principle of diminishing 
returns, he conceived a dynamical increase in the pro- 
ductive power of labor due to the multiplication of 
numbers. Large numbers supply all the advantages of 
nearby markets and a more perfect division of labor. 
While productive capacity is being augmented through 
an increase of numbers, the demand for commodities 
is growing for a greater variety and a superior quality 

"/6., 91, 92. ^^Ib., 98. 
'" /&., 11, 109. 



28 THE RICARDIAN RENT THEORY 

of goods. His concept of the dynamical increase of de- 
mands is such as to keep demand ever in advance of 
the supply. The conclusion following this argument is, 
that visages are augmented because of an increase in pop- 
ulation. We shall now see that the difference between 
Raymond and Ricardo on rent is not less striking than 
were their unlike views on wages. 

A national economist would hardly be expected to 
accept the Ricardian theory of rent, which serves an 
individualistic economics so well, and which formed 
the basis for the then prevailing arguments for the free- 
dom of trade. Raymond defined rent as "that portion 
of the product of labor or an equivalent, which the pro- 
prietor of the land is entitled to, for the use of his 
land." ^^ He makes rent a contract payment for the 
use of land. Elsewhere he strictly assimilates rent to 
prices in general. "Some writers," said he, "and espe- 
cially Mr. Malthus, have taken great pains to establish 
a distinction in principle, between rent paid for the use 
of land, and the price paid for the use of commodities 
or personal property, and the attempt to establish such 
a distinction, where in fact no such distinction exists, 
except in name, has led them into some very singular 
errors." ^^ 

Since the distinction between the price paid for usance 
in general and rent is only nominal, there can be no 
particular law of rent other than that which regulates 
the prices of goods. Now that a theory of rent is a 
theory of price, the real inquiry becomes a question of 
price determination. 

Very unlike a marginal cost theory was Raymond's 
view : "Both the rent and price of land are regulated 
and governed by the same laws which regulate and gov- 

"/&., I, 192, M/&., I, 184. 



DANIEL RAYMOND 



29 



ern the price of corn and everything else. The price 
of everything depends upon the proportion which exists 
between the supply and the demand." ^^ 

Similarly, he regards the distinctions between rent 
and interest as only nominal. "The consideration," he 
said, "paid for the use of land is called rent ; that paid 
for the use of money is called interest." '" He speaks 
of land as capital, and identifies land and capital as com- 
posing a common capital fund. Both are spoken of in 
the same sense as instruments in man's hands for pro- 
ductive purposes. -^ He speaks of both rent and interest 
as a per cent. ^^ Both are governed by the same law 
— that of supply and demand. ^^ In a rude government, 
he says, some risk enters into the loaning of capital other 
than land, ** but "independent of the risk of losing the 
principal, the interest of money ought to be at precisely 
the same rate as the rent of land." '^ 

Now that land is capital, and that the same laws must 
regulate returns to all capital, consistency will not per- 
mit a law of diminishing returns to apply to land while 
a law of increasing returns is applicable to manufactures. 
For a serious consideration of diminishing returns, how- 
ever, Raymond was on the wrong side of the Atlantic. 
Why would a lawyer be concerned over diminishing 
returns when no more than a gap had been made in the 
waiting forests of a new world? Not to overcome the 
niggardliness of nature but to augment the population 
was his problem. "To what extent," said he, "the fruits 
of the earth may be augmented, no human intelligence 
can tell. For aught that we can perceive, the earth is 

«7b., 183. 

=«/&., 254. 

^ lb., 104-105. 

2=/b., 2.59. 

'^Ih., Chap. XII. 

2< lb., I, 255. 



30 



THE RICARDIAN RENT THEORY 



capable of being made to yield an indefinite and almost 
unlimited quantity of food. We can no more fix limits 
to the powers of the earth to produce the necessaries of 
life than we can fix limits to the powers of life itself, 
or to the artificial wants of men. . , . The fruits 
of the earth are multiplied almost in proportion to the 
labor bestowed upon it." ^® 

But this extravagant optimism is modified, "I am far 
from supposing," said he, "that the earth is capable of 
being made to increase its fruits with the same rapidity, 
that the unrestrained powers of procreation are capable 
of multiplying the human species." -'' These powers, 
unrestrained, would so increase the population that "uni- 
versal starvation would sweep them off." -* But he 
thinks that the laws of nature will so regulate population 
that man need not interpose his agency. -^ Just what 
these laws are or how they work, he fails to inform us, 
yet he admonishes us to obey them. 

The effect of machinery is to increase corn-rent, but 
not money-rent. Agricultural improvements may throw 
some labor out of employment, but this labor would find 
employment in the extension of manufactures. ^° 

Raymond's want of method, his ungrammatical and 
illogical statements, together with occasional contradic- 
tions, leave no definite conclusion to be drawn. Though 
he assimilates land and capital, the trend of his dis- 
cussion seems to recognize dynamical diminishing re- 
turns in agriculture, which, however, are more than 
counterbalanced by increasing returns to machinery. 
This, together with the idea that growing prosperity 
accompanies the increase of population, and that divine 

2»/6., II, 111. 

^ n., 112. 

^Ih., II, 113. 

»/6. 

80/6., Chap. VIII, 



ALEXANDER H. EVERETT 31 

laws will most wisely regulate numbers, certainly leads 
to most optimistic predictions regarding the future well- 
being of man. On the whole, we find that Raymond 
was diametrically opposed to the gloomy Maltho-Ricar- 
dian theory. 

Quite in harmony with this attitude were the ideas 
of Everett. Like Raymond, Alexander H. Everett 
(1790-1847) was a lawyer. His book New Ideas on 
Population appeared on the same date as Raymond's 
second edition. Both he and Raymond were national 
economists of the same political faith. Their scientific 
writings, it is feared, may have been colored by the 
ardent zeal they held in common for the doctrines of 
John Quincy Adams. Not less pronounced than their 
deference to Adams was their common dislike for the 
pessimistic theories of the Maltho-Ricardian school. 

This writer was a brother of Edward Everett; he 
studied law in the office of John Quincy Adams and 
served on many important commissions. As he was 
an orator and statesman of ability, as well as a member 
of his state senate and a minister plenipotentiary at 
the court of Spain, his works were influential and found 
wide circulation. 

Everett did more on the population aspect of the 
problem than did any other of the early American writ- 
ers. In addition to the work just mentioned, he carried 
on a correspondence with George Tucker respecting the 
population problem, and made many speeches on the 
subject. He conferred personally with Malthus on this // 
question. ^^ 

*i Everett, Nev) Ideas on Population, 1st ed., pref. Everett was grad- 
uated with highest honors at Harvard in 1806; he was appointed United 
States charge d'affaires at the Hague in 1818. Aft^r serving as Minister 
to Madrid, he returned in 1825 to America and became editor and pro- 



32 THE RICARDIAN RENT THEORY 

His work on population begins with objections to the 
ideas, (i) that poHtical institutions are the source of all 
evil, and (2) that they have no tendency to improve the 
condition of mankind, and are entirely indifferent. He 
said, "The former proposition is directly maintained by 
Godwin, and the latter is implied in the theory of 
Malthus." 32 

Like Raymond, he thinks that Malthus assumes too 
much from the single example of the rapid increase of 
population in America. "To assume the highest known 
rate of increase ... as the standard of the ordi- 
nary progress of population, would be like assuming 
the strength and intelligence of the most powerful and 
wisest man ... as the standard of the ordinary 
physical and intellectual endowments of the race. It 
would be unsafe to draw a general conclusion 
from a single instance ; and that the single instance least 
suitable for this purpose would be precisely those of 
the highest and of the lowest known rates of increase; 
the former of which has been selected by Mr. Mal- 
thus." 33 He says we must know the power of popula- 
tion to increase, the checks and the rates of increase 
under these checks, as well as the rate at which food can 

prietor of The North American Review. He was a member of the Massa- 
chusetts legislature, a confidential agent of the government to Cuha, 1840. 
He was appointed to a diplomatic post at Peking, 1845. He was a 
frequent contributor to The Monthly Anthology, 1803-1811. His first 
important book was Europe, Powers, with Conjectures on the Future 
Prospect, 1822. This was translated into German, French, and Spanish. 
Other books were: Neiv Ideas on Population 1823; Critical and Miscellane- 
ous Essays 1845-1847; Life of Joseph Warren and Life of Patrick Henry 
in Sparks' American Biographies. He was a frequent contributor to 
The North Ainerican Review ; he also contributed economic essays to 
The Boston Quarterly. (Nat. Encyc. of Amer. Biog., IX, 256. See also 
Neiv Inter. Encyc, VII, 312.) 

The North American Review was warm in its praise of the New Ideas 
(North Amer. Rev., Oct., 1823; Jan., 1827). After most elaborately- 
praising the New Ideas, a reviewer in The North American Review said, 
"Mr. Everett's arguments are triumphant, and amount to a complete 
demonstration." (XXIV, 219). 

32 Everett, New Ideas on Population, 2nd ed., 120. 

S3 16., 53-54. 



ALEXANDER H. EVERETT 33 

be obtained, before we can compare the rates of increase 
between population and food. '* 

Everett urges another criticism against Malthus. "He 
views," said Everett, "every individual added to society 
as an additional consumer, without appearing to reflect, 
that he is also at the same time an additional laborer." ^^ 
This seems hardly just to Malthus, for he knew as well 
as did Everett that more individuals means more labor- 
ers. This criticism implies a misunderstanding on the 
part of Everett as to the real problem confronting Mal- 
thus, namely, that of historical diminishing returns. Be 
this as it may, it was in criticism of this view that Ever- 
ett advanced the "new idea" which furnished the main 
thesis and the title of his book. Briefly, the "new idea" 
teaches that the increase of population is the cause of 
abundance and not of scarcity. ^"^ 

Natural advantages and skill determine the productive- 
ness of labor. ^^ He assumed natural advantages to be 
invariable in order that he might determine what eflFect 
an increase of population would have upon skill. He 
fails to consider diminishing returns, and argues to the 
effect that the greater the density the more perfect be- 
comes the division of labor. Like Adam Smith and 
Raymond, he thinks that the division of labor stimu- 
lates the invention of new machinery, ^® and develops 
all the parts of industry. The progressive rate of pro- 
duction is considerably more rapid than that of the 
increase of population. During the seventeenth century, 
the population of Great Britain doubled, claimed Everett, 
while its productive power multiplied a thousand times. 
Malthus' ratios run, for food, i, 2, 3, 4, 5, 6, etc., and 

»«/&., 54. 
S5/6., 21. 

*»/&., Chap. II. 

'"lb., 24. 

»/b., 27. Adam Smith, Wealth of Nations, I, 11. 



34 



THE RICARDIAN RENT THEORY 



for population, 2, 4, 8, 16, 32, 64, etc. ; while Everett's 
ratios run, for food, i, 10, 100, 1000, 10,000, 100,000, 
etc., and for population, 2, 4, 8, 16, 32, 64, etc. He 
called this estimate moderate, and adds that it "is still 
much higher than it need be" in order to refute the 
system of Malthus. ^® 

Despite these statements, so absurdly large, he else- 
where admits a principle of resistance but regards it of 
no importance and as belonging to an abstract theory of 
perfectibility. *° He makes much of the point that pop- 
ulation is not supported on the same soil that it occupies, 
and that Malthus does imply such an assumption. He 
considers the time far distant, if indeed it shall ever 
come, when population will press upon the means of 
subsistence, whereas Malthus considered that such pres- 
sure had long existed. ^^ 

What he terms the "new idea" was, in reality, the 
"old idea," *^ and it was the only idea in the book worthy 
of consideration. None of his economic writings can 
claim more scientific merit than the book just reviewed. 
Further space will not be given them. 

Although not illuminating in one sense, there is a 
sense in which the works just reviewed are most in- 
structive. They express the American idea of that time. 
They exemplify a felt disproportionality, a pressing need 
for a larger population. No one expects to find in the 
America of 1823 a favorable reception of Ricardian rent, 
embodying, as it does, the Malthusian theory of popula- 
tion. Popular writers like Raymond and Everett, who 
were not economists primarily, are not supposed to ac- 
cept so pessimistic a doctrine. Their profession steeped 

® Everett, New Ideas on Population, 2nd ed., 26, 27. 
^Ib., 44. 

"Malthus, Essay on Population, 2nd ed., 353, 354. 

*2 Cannan, Theories of Production and Distribution, 124-130; Gide 
and Rist, Histoire des Doctrines Economiques, 140. 



WILLARD PHILLIPS 35 

them in the "American idea," and their national environ- 
ment was boundless opportunity. They could not enter- 
tain an opinion based upon the niggardliness of nature. 

The third of the early national economists in point of 
time, and the ablest of the three, was Willard Phillips 
(1784-1873). This author held views so similar to 
those of Raymond and Everett that they should be con- 
sidered in the same chapter. The three were reared 
and educated contemporaneously in New England. 
Around them, a new and really national life was being 
developed; American isolation and the struggle for in- 
dustrial independence were forces which caused a pro- 
nounced movement for protection; and a comprehensive 
policy was being formulated for the development of the 
resources of this country. Particularly true were these 
conditions in the twenties, when appeared the works of 
the economists under review. 

Phillips, like Raymond and Everett, was a lawyer by 
profession, a national economist, and an opponent of 
Malthusianism. He was a business man who for thirty 
years was president of a life insurance company; a law- 
yer who acted in the capacity of judge for eight years; 
an editor who was connected with four of the leading 
journals of the time, and also with Pickering's Reports; 
and an author who wrote on questions of law and politi- 
cal economy. *^ 

^ The Twentieth Century Biographical Dictionary of Noted Americans, 
VIII, (no paging). Willard Phillips, editor and author, born Bridge- 
water, Mass., Dec. 19, 1784, died Cambridge, Mass., Sept. 9. 1873. 
Harvard A.B., 1810: A.M., 1813: tutor there 1811-181.';. Practised 
law in Boston 1818-184.5. Representative in the General Court, 1825- 
1826; judge of probate of Suffolk County, 1839-1847. President of New 
England Mutual Life Insurance Company, 1843 to his death in 1873. 
LL.D. Harvard, 18.53. Fellow in the American Academy of Arts and 
Sciences. Connected editorially with the General Repository and Review; 
North American Review; American Jurist; first and second American 
editions of Collyer's Law Partnership (1834-1839) and the first eight 
volumes of Pickering's Reports. He was author of Treatise on the La/w 
of Insurance (1823); Manual of Political Economy (1828); The Law 



36 THE RICARDIAN RENT THEORY 

Phillips' Manual of Political Economy is, in keeping 
with its author, a practical rather than a theoretical work. 
His reasoning is accompanied throughout with copious 
historical illustrations and statistical data, evincing a 
fund of information regarding our resources. "The lit- 
erary execution of the work is highly creditable to the 
author. The style is correct, perspicuous, and, as far 
as the nature of the subject admits, elegant." ** 

"The object of this treatise," said Phillips, "is to 
present ... a concise, practical view of the most 
important principles of this science, with an adaptation, 
more particularly, to the circumstances and conditions 
of the United States." *^ He admits that the economic 
principles of one nation may not be wholly different 
from those of another, but they may "have a practical 
application in some places and be totally inapplicable 
elsewhere." *® 

In harmony with Lord Lauderdale and Daniel Ray- 
mond, he takes the national view, ^'^ and regards wealth 
as capacity for production. He does not limit himself 
to things which are bought, sold, and exchanged, and 
are subject to property. National productive capacity, 

of Patents for Inventions, including the Remedies and Legal Proceedings 
in Relation to Patent Rights (1837) ; The Inventor's Guide (1837) ; 
Protection and Free Trade (1850). 

Through correspondence I am informed that, "Mr. Phillips had a 
strong sympathy for the common man. He was always willing and 
anxious to help the needy. He was very practical and sympathetic in 
his writings, in his daily life, and in the great business of life insur- 
ance to which he gave so large a share of his time and study." 

See also Appleton's Encyclopedia of American Biography, IV, 763. He 
was editor with Jared Sparks (1817-1818) and frequent contributor to 
The North American Review. 

^ North American Review, XXXII, 216. 

* Phillips, Manual of Political Economy, Pref., v. 

«/b., vi. 

*' Professor D. R. Dewey says, "The Manual is an exposition of Eng- 
lish and academic theory then current. Further experience, however, 
changed the author's convictions and the later work, a systematic de- 
fense of protection in the form of seventy propositions, is of value as 
illustrating the intellectual exposition of protectionism at this time in 
the United States." Palgrave, Diet, of Pol. Econ., Ill, 103. Thia 
statement is in error. 



WILLARD PHILLIPS 



37 



he thinks, must consider the free as well as the slave, 
a salubrious atmosphere, and a navigable river without 
tolls as well as a canal with tolls. He agrees with Lord 
Lauderdale that a great scarcity of water, which occa- 
sions that necessity to become private property and sub- 
ject to purchase and sale, makes some individuals richer, 
and the community poorer. Phillips would have argued 
that, had Prcrvidence constructed a broad flowing and 
navigable river from Colon to Panama, it would have 
been an object of wealth as truly as is a man-made 
canal costing three hundred and fifty millions. "We per- 
ceive," said he, "from these instances, that the capacity 
and facilities for production are not tested and meas- 
ured by the mere subject of property or of things bought 
and sold in a community. It would be unnecessary to 
notice this distinction, had not the industrial means and 
faculties of a nation been denominated national wealth, 
and we must therefore guard ourselves against accept- 
ing the word wealth in its ordinary meaning when it is 
so applied." *^ 

His third chapter contains a forceful argument against 
the labor-cost-of-production theory of value. He limits 
value to things, material or immaterial, which are sub- 
ject to purchase and sale. His clear arguments and 
numerous illustrations are all to the effect that value 
is subjective and individualistic, and may or may not 
correspond with cost. The following words are in har- 
mony with the whole of his discussion of value : "Some 
instruments are merely useful, as the implements of 
husbandry and the tools of mechanical trades; others 
again are in some hands the implements of industry, in 
others, those of amusement. The amateur uses his violin 
for recreation, the professor for a livelihood. The 

** Phillips, Manual of Political Economy, 1214. Quotation, 13-14. 



38 THE RICARDIAN RENT THEORY 

hunter labors, but the sportsman amuses himself in the 
chase. The desire to obtain any particular thing gives 
it its value, and the motives of such desire are as vari- 
ous and numerous as the appetities, tastes, passions, 
wants, and caprices of mankind. As value is created 
by this desire, so it is limited by its strength and in- 
tensity." *^ 

His is rather an instrumental concept of capital, al- 
though he speaks of land as capital, ^° and at times of 
rent as a per cent of the value of property. ^^ But he 
shifts from the technological to the value concept of cap- 
ital and reasons correctly thus : "The value of all capital 
is estimated by the income derived from it." ®- 

Turning now to the tariff, we are met with a politico- 
economic question, which, from the birth of economics, 
has been impregnated with prejudice. The scientist and 
the man are inseparable always, but on this question 
human frailty predominates, and the will, rather than 
the reason, rules. But much to the credit of our author, 
his long, interesting, and bountifully illustrated chapter 
(VIII) on commerce is a defense for the tariff evincing 
much talent and little bias. The North American Review 
said, "His argument on the subject is powerful, lucid, 
and as we think, conclusive." ^^ 

Enough has been said to show that the economics of 
Phillips was upon a different basis from that of the 
Maltho-Ricardian school. He considered Malthus' work 
on population to be of little importance. He spoke of 
it as "the now hackne)^ed doctrine," °* and said that, 
"the whole argument has been confuted in a less known 
work by Mr. S. Gray." ^^ 

^Ih., 33. ™/{,.^ 97. 

»/&., 98. ^^n., 97. 

S3 North Amarican Review, XXXII, 229. 

^ Phillips, Manual of Political Economy, 75. 

^Ib., 139. 



WILLARD PHILLIPS 39 

The ideas of Mr. Gray to which PhilHps pins his 
faith are: (a) The means of subsistence increase faster 
than does population, as evinced by the facts of uncul- 
tivated or ill-cultivated lands, and the emigration from 
the country to the city because of a want of employ- 
ment in the production of more food. He argued also 
that prices had been reasonable, (b) Then, in harmony 
with Everett's New Ideas, Gray argued that "the in- 
crease of population instead of having a tendency to 
diminish employment and produce poverty, is the grand 
source of all permanent increase in employment and 
wealth." ^® Phillips accepted this argument and said, 
"not only an intelligent and industrious, but also a dense 
population is necessary to bring out all the natural ad- 
vantages for production." " He would not "hail famine 
as a deliverer, and celebrate a pestilence as a subject of 
thanksgiving." ^* 

Very unlike the English doctrines of that time were 
the arguments of Phillips. Very little reason is there 
for Professor Dunbar's implication that Phillips was a 
disciple of Adam Smith, and for his borrowed state- 
ment that "he [Phillips] sought to take up the subject 
where Adam Smith had left it." -'^ 

^Pamphleteer, XVIT. 415. In his Happiness of the State, Mr. Gray- 
writes a chapter (Bk. VI, Chap. 3) to demonstrate that population regu- 
lates STibsistenoe rather than the reverse. He claimed that America's great 
production was dne to a rapidly increasing population. 439. He said, 
"Prom this analysis of circiimstances, the fact in nature is clearly estab- 
lished, that population regulates subsistence, not subsistence population ; 
that the progress of subsistence, with the exception of occasional irregu- 
larities, is caused by the progress of population and by the skill and indus- 
try of that population : In other words that it is the ratio of the increase 
of jiopulation, rapid or slow, which regulates the ratio of the increase of 
subsistence. . . Population will force subsistence on at a rate, at 

least equal, but generally higher than its own." 445-446. 

^ Phillips, Manual of Political Economy, 106. 

«7b., 140. 

* Dunbar, Essays, II. I see no evidence that Professor Dunbar had 
read the work he criticised. He said: "Willard Phillips produced a 
treatise (1828) in which, treating the whole structure of Malthus and 
Ricardo as unsound, he sought to take up the subject where Adam Smith 
had left it. He treated it with an abundant knowledge of industrial 
and commercial facts, and with a mind well trained for speculative 



40 THE RICARDIAN RENT THEORY 

Phillips defined rent to be "the net proceeds of the an- 
nual products over and above the expenses of produc- 
tion." ®° He regards rent in the sense of surplus produce 
rather than as a contract payment by the farmer to the 
landlord. ^^ 

After a deriding criticism of Ricardo's rent, he said, 
of the no-rent concept, "It might be readily tested, and 
confuted too, by merely going into the country and 
learning that the land last enclosed for wheat yielded 
rent. It proves that, after rents have once accrued in 
a community, every extension of wheat cultivation is 
detrimental to the national prosperity. It proves also 
that if all the lands are of equal fertility, rents will 
never accrue." ^- 

Here, of course, Ricardo's intensive no-rent concept 
is overlooked. Ricardo, however, had laid his argu- 
ment open to this criticism when he said, "If all land 
had the same properties, if it were unlimited in quantity, 
and uniform in quality, no charge could be made for 
its use, unless where it possessed peculiar advantages of 
situation. It is only, then, because land is not unlimited 
in quantity and uniform in quality, and because in the 
progress of population, land of an inferior quality, or 

inquiry, but it was complained, even by a friendly contemporary critic, 
that he reared nothing in the place of that which he sought to remove." 
H-12. One has to read only a small portion of the first six pages of 
the nineteen page review, evidently referred to by Professor Dunbar, to 
find almost every word of his criticism. His last statement seems to 
refer to the whole work, whereas the critic from whom it is quoted wrote 
only in relation to Phillips' treatment of Malthusianism. "But," said 
Professor Dunbar, "it was complained, even by a friendly critic, 
etc." Here is what the critic had to say: "By rejecting the theory 
of Malthus with its consequences, and taking up the science where it 
was left by Adam Smith, Mr. Phillips has at once cleared his subject 
of a cloud of popular errors, and given a value to his work, which 
does not belong to any of the recent English productions." (No. Amer. 
Rev., XXXII, 220). Would not the word "praise" rather than "blame" 
seem more appropriate? The critic erred in saying that Phillips took 
up the subject where it was left by Adam Smith. Professor Dunbar 
doubly erred in copying an error with which erroneously to classify 
Phillips with Adam Smith. 

<" Phillir>= Mn^v-l of PnliHnal Economy, 107. 

»/&., 108. «/;&., 108-109. 



WILLARD PHILLIPS 41 

less advantageously situated, is called into cultivation, 
that rent is ever paid for the use of it." ^^ 

Phillips declared that the doctrine was inapplicable in 
the United States, and that more wheat could be pro- 
duced here without additional expense per bushel. ®* 

The contrast between Ricardo's "one-cause method" 
and Phillips' practical method is illustrated in their dif- 
ferent ways of accounting for rent. Some, not all, of 
Phillips' causes for rent are: (a) Regarding the soil, 
he would consider its location in relation to climatic 
conditions and to the market, its productive capacity for 
different crops, since marginal land for one crop might 
not be marginal for another, also the variety, quantity, 
and quality of products that may be secured from under 
as well as upon the soil. Further he would allow for 
numerous advantages in a territory which is so fertile 
as to admit of condensing a numerous population upon 
a small territory, (b) Regarding the population, he 
would consider race characteristics, the degree of ad- 
vancement, and density as well as the nature of desires 
and the extent of purchasing power. The ability of a 
farmer to select proper implements, to understand the 
rotation of crops, to judge of the best size of farms, 
his ability to procure suitable seeds, good breeds of 
animals, and to know how and when to market his 
products, are of important bearing on the cause of rent, 
(c) Under the heading of security, he mentions national 
and individual protection, and the enforcement of con- 
tracts. Under this heading may be grouped also free- 
dom from insects, convulsions of nature, plagues, and 
calamities. Their absence add to the propitiousness of 
production, (d) Under the heading of costs to produce 

^ Ricardo, Principles, 46-47. 

** Phillips, Manual of Political Economy, 109. 



42 THE RICARDIAN RENT THEORY 

and get commodities to the market, he would include 
such public expenditures as those for dykes, levees, rail- 
roads, canals, and roads, and such private expenditures 
as those for building materials and fuel to provide the 
farmer with a home, together with the annual outlays 
such as for wages, interest, and hires. To determine 
rent, regard must be had for these forces and for the 
market value of the product. ^^ Ricardo's abstract world 
was simple: Phillips' practical world was complex. 

It would be difficult to find a better discussion than 
Phillips gives of the manner in which agricultural pro- 
duction accommodates itself to the distance from the 
market. The difficulty of transporting commodities 
causes lands distant from the market to be turned to 
the production of such products as are highly durable 
and that have much value with but little weight and 
bulk. "In the United States," said he, "innumerable 
cattle, horses, sheep, and swine are driven to the princi- 
pal markets on the Atlantic coast from the interior dis- 
tricts, not because these districts are not well adapted to 
the cultivation of fruits, esculant vegetables, wheat, rye, 
beans, peas or onions, but because these animals can 
be sent to a distant market at comparatively small ex- 
pense." ®^ These forces and transportation facilities like 
the Erie Canal tend toward the equalization of rents and 
land values. ^'^ 

Unlike Ricardo, he argued that fertility and improve- 
ments in agriculture cause rents to rise. *'^ His thought 
was that increasing desires would keep in the lead of 
augmenting wealth. But he did say that to the extent 
that prices fall, as a result of the increased supply, 
money rents would fail to rise. ^^ 

«=/&., Chap. V, and 109, 110. 
6«/&., 110-119. Quotation, 111. 
<"Ib., 114. 68 7&. <»76., 115. 



WILLARD PHILLIPS 43 

He considered that an increase in money rents was 
not of itself a blessing to the country any further than 
it can make a foreign country pay them. "A rise of 
rents is, however, one indication of national growth and 
prosperity." '° Rising rents on commodities that are not 
necessities, as Burgundy or Madeira wine, the price of 
which is enhanced by the growing demand when only a 
limited amount of soil is capable of their production, are 
no burden when consumed in the country where pro- 
duced. If such commodities are consumed abroad, the 
nation producing them is blessed to the extent that their 
price exceeds their cost. Conversely, the country import- 
ing them is injured, "for by importing them," he said, "it 
exchanges two, five, or ten days' labor of its own citizens, 
for one of a foreign laborer." ^^ 

Here Phillips considers the nation as a whole, and 
overlooks the ill effects that monopoly rents have on 
distribution. But the nation, like the individual, which 
can export goods at high prices, which cost little, and 
at monopoly prices, is certainly benefitted by doing so. 

Unlike Ricardo, he thought that England's Corn Laws 
were wise. He claimed that protective laws make a 
country's agriculture more dependable in time of war. 
Again he argued that, were there no duty on agricultural 
products, there would be great fluctuations in prices, 
which would be bad for internal economy. He advo- 
cates the peculiar, though defensible, proposition that 
the higher the general level of prices in a country, the 
greater is the amount of money taxes the citizens can 
pay. '^ 

In further dissent from Ricardo, but in harmony 
with Malthus, he insists that the interests of the land- 
TO/ft., 120. 

■^Ib., 116. 
■^2/6., 123. 



44 THE RICARDIAN RENT THEORY 

lords are in harmony with the interests of the whole 
people. "It is too well understood, to be made a ques- 
tion, that the permanent interests of agriculture, manu- 
factures, and commerce, are intimately blended and 
mutually dependent, and each equally connected with 
the permanent welfare of the community." ^^ 

Phillips treated the concept of diminishing returns as 
a matter of little or no consequence. Though he con- 
ceived this law in the dynamical sense, yet he believed 
that its consequences would be defeated by inventions, 
scientific methods, and skill. 

If this work be judged as a whole, he seems to have 
been influenced by Benjamin Franklin more than by 
any other American writer. Evidently he was a great 
admirer of Franklin, whose economic writings he edited 
for Jared Sparks' collection of Franklin's works. 

Even to-day Phillips' book is well worth reading. It 
ably expressed the economic and industrial conditions 
of this country. It is the work of a well-trained mind, 
which possessed thorough literary culture. His formid- 
able array of facts compelled respectful hearing by the 
critics of his time. 

Brief attention will be given to certain economists 
who only incidentally considered rent. It is not within 
our province to review Due, Vail, Potter, Opdyke, ''* 

''^Ib., 125-126. 

'* In his treatise on Political Economy, he argues to justify private 
property in land (Pt. II, Chaps. 2, 3). His economy is an art rather 
than a science. He objects to the economy of J. S. Mill because his work 
is a product "of one who has been reared and educated under political 
institiitions different from ours, . . . What we republicans need, 
is a system of political economy in perfect harmony with the other por- 
tions of our political edifice." (Pref., v.) He does not give a treatise 
on rent. The purpose and content of his book are expressed in his own 
words as follows : "The present brief treatise originated in an effort 
to ascertain the true commercial policy of our country. That effort was 
commenced some years ago, and was first directed to an examination 
of the arguments presented in favor of the protective system and the 
revenue system." (Pref., iii.) 



OTHER NATIONAL ECONOMISTS 45 

and Mathew Carey, who, although they were prominent 
economic writers, left no theories of rent. Nathaniel A. 
Ware (born in South Carolina, 1780, died in Texas, 
1854) was a lawyer, and for a time secretary of the 
territorial government at Natchez, Mississippi. He 
travelled extensively, making a study of botany, geog- 
raphy, and the natural sciences. He wrote on the Fed- 
eral Constitution and on political economy. '^^ Ware, 
like the authors above reviewed, was a national econo- 
mist. His book was a defense of protection. Radical 
statements, peculiar ideas, and rash criticisms are char- 
acteristic of his writings. He conceived political econ- 
omy as an art rather than as a science. "Government 
by circumstances is the golden rule in political economy. 
I would lay down this rule or maxim as the 
only one in this science." ^® 

On population. Ware's ideas are an admixture. "It 
is important to have a full and efficient population in 
all countries, for the defense, wealth, and refinement 
that ought to accompany every government or associa- 
tion of the human family." " "New countries," said he, 
"with an abundance of land, and not a surplus of labor, 
ought to encourage the increase of population in every 
way v/ithin their reach, both by a native growth and 
an immigration." '^ He further said, "The natural check 
and limitation to an increase of population is the capac- 
ity of the earth to support and feed it. To this point 
it tends, and nothing in the end can prevent its reaching 
this maximum." "® 

Like Raymond, he considers pride a check to over- 
population. Where pride is wanting, he would with- 

■^ Harper's Encyc. TJ. S. Hist., X (no paging). 

78 Ware, Notes, 3. 

•" Ware, Notes, 246. 

'»Ib., 247. 

«/6. 



46 THE RICARDIAN RENT THEORY 

hold licenses from marriage, and declare "illegal all 
marriages without them and deny to the parents the 
right of citizen, and to the offspring the rights of legiti- 
macy." ^^ Humanity aside, he would have society to 
"kill off" those who are reduced to beggary. "The 
moment an individual is base and mean enough to beg, 
or avail himself of public charity, unless in the shape of 
a hospital, he is totally worthless and sunk beyond all 
remedy. There is no foundation in his case left upon 
which to build him up, no pride, no self-esteem, no ambi- 
tion — in short, the person is not a man but sunk to 
the level of the brute ; not a biting or a venomous brute, 
but a mere eating brute. Humanity aside, it would be 
to the interest of society to kill off all such drones, get 
rid of such excrescences, and cast off such burdens." *^ 
He cannot be said to offer a theory of rent ; but, upon 
the problem of returns from land, he shows a most 
unbridled optimism. "The capacity of the earth," said 
he, "to sustain population scarcely knows any limit, 
If the sort of improvement be made that will 
control moisture, make at will manure, or apply chemi- 
cal stimulus to plants, and give to them certainty, every 
rood will not only sustain its man but its ten men. Ex- 
periments show the practicability of fifteen hundred 
bushels of Irish potatoes to the acre ; and, with certainty, 
that is the food of forty-five persons for a year, in the 
last resort. And at that rate the world is not yet the 
ten-thousandth part up to its capacity to sustain life." ^^ 
Evidently Ware was not in harmony with the Maltho- 
Ricardian theory. 

John Rae, though one of the ablest economists of 
his time, wrote nothing on the population-rent problem. 

80 26., 248. «ii6., 195. ^Ub., 249. 



OTHER NATIONAL ECONOMISTS 47 

The following brief note gives his attitude toward Mal- 
thusianism : "The laws of true inductive science are 
of universal application and admit of no exceptions. 
If even a single manifest exception occurs, it ought to 
invalidate the law. . . . Considered in this way, 
the laws of population as expounded by Malthus will 
be found to fail." ^^ 

Rae's basis of thought is, it seems, that man is an 
animal and more. As animal he must more than repro- 
duce himself, else accidents would destroy the race. Like 
lower animals, he is led by instinct to propagation. He 
is more than animal in that he knows the result of his 
act, and that his dread of results causes him to refrain 
or to negative them. "For," he says, "the reason that 
man is more than animal, therefore, to increase, or to 
merely preserve, the numbers of any society, it is neces- 
sary that there exist an effective desire of offspring." ^* 

Calvin Colton (1789-1857) is to be classified with the 
national economists. He was a scholarly man and a 
voluminous writer on protection. He was graduated 
at Yale in 1812 and at Andover Theological Seminary 
in 1815, at which date he entered the ministry. After 
eleven years, he gave up preaching because of voice- 
failure. He went to England as a correspondent for 
The New York Observer ; and, after his return to this 
country, he distinguished himself as a writer of political 
tracts which advocated the principles of the Whig party. 
He edited The True Whig for two years after 1842; 
and in 1848, he published his large treatise, Public Econ- 
omy for the United States. At the age of sixty-three, 
he became professor of political economy at Trinity 
College at Hartford, Connecticut. ®^ 

*3Rae, The Sociological Theory of Capital, 354. ^* lb., 356. 
85 Appleton's Encyc. of Anier. Biog., I, 695. 



48 THE RICARDIAN RENT THEORY 

His book may be described as an elaborate defense 
of the protective tariff. He uses the same argument as 
did Professor Bowen at a later date, to justify the con- 
tention that political economy is not a science, but an 
art, and that different states of society require different 
economic policies. ^® 

He dismisses the rent problem with the statement that 
America has no landlord class, and that, as a conse- 
quence, a consideration of rent would be irrelevant to 
an American political economy. ^^ 

He seems not to have understood Malthus' theory of 
population; and, taking the theological point of view, 
he speaks of it as a "libel on Providence — a very grave 
and impious one." Being shocked at the impudence of 
the Free Trade School, who "in the face of man and 
heaven" declare this doctrine of "iron despotism," he 
lays on humanity any fault there may be respecting over- 
population, and assumes that the goodness of Providence 
will protect us. ^* 

The writers mentioned in the latter part of this chap- 
ter might well have been eliminated from our study on 
the ground that they wrote little on the subject, that 
they made no contribution to the solution of the rent 
problem, and that they were unappreciative of the prin- 
ciples they were condemning. As writers on economic 
questions, however, they were influential in shaping pub- 
lic opinion, and, in turn, they reflected contemporary 
opinion. Had they been academic men, it is likely that 
their thought would have been gleaned from the leading 
English texts. But they were of the people, and no 
impress of the prevailing Maltho-Ricardian thought pre- 
vented their expressing, more or less inadequately, 
American public opinion on the population-rent problem. 

8'Colton, Public Economy, 27. ^ lb., Chap. X. ss /j,.^ 159. 



OTHER NATIONAL ECONOMISTS 



49 



The early national economists just reviewed should 
be judged in the light of the conditions surrounding 
them. Their desire for a rapid increase in the popula- 
tion was wholly defensible. The best thought of our 
day cannot agree with their reasoning on the subject, 
nor can it agree with the English theory which they 
opposed. The tendency of numbers to multiply and the 
checks operating against that tendency are working 
toward a proportion and balance where the numbers of 
people will be economically adjusted to the resources 
upon which they must depend. The little attention they 
gave to land rent was but incidental to their larger 
thought — that of the development of the national pro- 
ductive capacity. Their definition of wealth as pro- 
ductive capacity is unsuited to a distributive economy 
such as is engaging the attention of scholars today. 
Neither is our definition of wealth as scarce goods suit- 
able for reasoning as to the future strength and power 
of a state. It is interesting furthermore to note that 
these professional and educated men, writing with the 
background of practical experience rather than of Euro- 
pean custom, regarded land as capital, and rent as fixed 
by the same laws that govern wages. The grotip of 
writers we shall reviev/ in the following chapter adhered 
to a point of view closely akin to that of the classical 
writers in England. 



CHAPTER III 

CIvASSICAI, ECONOMISTS — McVICKAR, 

COOPER, NEWMAN, WAYEAND, 

AND VETHAKE 

THIS chapter will be devoted to those early 
American economists, who, on the whole, fol- 
lowed in the lead of the British economists. 
All of them were college professors, highly educated, 
and of solid merit. Were ability of authors rather than 
differences in subject-matter primary in our classifica- 
tion, at least three chapters should be devoted to these 
economists. But so similar were their writings, and 
so alike were they to the prevailing viewpoint, method, 
and content of the Ricardian school, that to present them 
in different chapters would involve a repetition of ideas. 
Circumstances of profession, rearing, and education 
united to divorce them from the vital issues, needs, and 
public opinion of America. Not the factory and the 
farm, but the classroom and the library were their 
environment. On economics, little had been done in 
this country. What had been done could have little 
influence on these professors because our writers were 
on the wrong side of the Atlantic to command the atten- 
tion of scholars. As in matters of fashion and style, 
so in questions of productive scholarship, until recently, 
Americans have patterned after England and Europe. 
Heavy teaching schedules, interests primarily in fields 
other than economics, wide separation from one another, 
and poor transportation facilities denied to these authors 
the mutual benefits of association. 



JOHN McVICKAR 5 1 

They wrote text books; as professors, they reahzed 
the need of concise, well written texts on the elements 
of poHtical economy. And the purpose of their efforts 
was to meet this need. It is natural that professors of 
mathematics or moral philosophy or chemistry or litera- ' p 
ture, as we shall see they were, should turn to Adam 
Smith, Say, Ricardo, Malthus, or McCulloch, and eclec- 
tically formulate the principles of the standard works 
into suitable texts. Leisure from a variety of duties 
and specialized labor are necessary to make contribu- 
tions to science. Able as they were, original contribu- 
tions to political economy could not be expected from 
them. Their purpose was formulation, not origination. 

Rev. John McVickar ^ was the first of these econo- 
mists. The son of a well-to-do merchant, he was born 
in New York city in 1787. When a mere boy of seven- 
teen years, he was graduated from Columbia College, 
now Columbia University. From the date of his gradua- 
tion until 181 1, he was in England with his father. Thus 
the formative period of his life was spent in England 
when economic questions were in the vital air of public 
thought. At that time. Parliament and public opinion 
were agitated over England's industrial condition. Dis- 
cussions and conditions that were shaping the thought 
of Malthus, Ricardo, James Mill, and McCulloch, were 
of the environment in which young McVickar's forma- 
tive period was spent. 

Upon his return to this country, he married into a 
wealthy family, became a preacher, and devoted his 
energies to the teaching of literature, moral philosophy, 
and economics in Columbia. This stay in England, when 
we consider the economic conditions which then existed 

^Nat. Encycl. Amer. Biog., VI, 347. 



52 THE RICARDIAN RENT THEORY 

in that country and the period of McVickar's life when 
there, must have largely directed the formation of his 
ideas on economics. Freed from the necessity of hav- 
ing to acquire a livelihood, and devoted to a profession 
v^hich removed him from personal touch with the eco- 
nomic conditions of this country, he spent the com- 
paratively little time that he gave to this subject in teach- 
ing the so-called Classical economics. He wrote a primer 
or text for common schools which did not take up the 
rent problem. His chief service was the editing of 
McCulloch's encyclopedic article on PoHtical Economy.^ 

In this edition, McVickar makes a note to the effect 
that the cultivation of inferior soils is not the cause of 
higher prices, but rather that high prices cause the cul- 
tivation of inferior soils. ^ He did not develop the point, 
and evidently did not recognize that in this statement is 
a truth so significant as to demand a re-examination of 
the whole labor-cost theory of value. He considered 
satisfactory and conclusive McCulloch's repetition of 
Ricardo's dictum that "corn is not high because a rent 
is paid, but a rent is paid because corn is high." * 

Evidently Professor McVickar used this work as a 
text ; ^ and, in the introduction of his lectures, Pro- 
fessor Cooper said he used it as a text in South Carolina 
College. Cooper said of the work, "Mr. McCulloch's 
Outlines of Political Economy, first published in the sup- 
plement to the Edinburgh Encyclopedia, has lately been 
published at New York, at the expense of James Wads- 
worth, Esq., of the Genesee County, with some very 
useful notes by the Rev. Mr. McVickar, and which I 
think the best text book that at present I can recom- 

^ McVickar's notes appended to this article show him strictly in har- 
mony with the ideas of McCulIoch. 

* McVickar, edition of McCulloch, 125. 

^Ib., 121, 122, and note. 

^ North Amer. Rev., XXV, 113. 



THOMAS COOPER 53 

mend. The treatise on political economy, second edition, 
by James Mill, Esq. (a masterpiece of close and logical 
reasoning) has not yet been republished among us." ® 

This strong recommendation of McCulloch and praise 
for James Mill inform us at once that Professor Cooper 
shared with Professor McVickar a high regard for the 
Classical Economists. Cooper was a man of influence 
and power, who, in many respects, was the most note- 
worthy character we have to review. Always he had 
the courage of his convictions, and he was a fighter who 
never feared trouble. As defender of Malthus on pop- 
ulation and of Ricardo on rent, he met with both extrav- 
agant praise and violent criticism. In his defense of 
the freedom of trade, he was fearless, outspoken, dog- 
matic, hypercritical, and radical in the extreme. The 
stand he took on political questions in England caused 
Edmund Burke to single him out for a special attack 
in Parliament. He replied with the vigor of a Spartan ; 
soon, however, he was driven from the country. In the 
memorable days of John C. Calhoun, intense excitement 
was produced by the rare powers and great learning of 
Cooper in favor of nullification. Indeed, he was the 
radical of the radicals in the state of South Carolina. 
In this connection, Professor J. W. Burgess has char- 
acterized him as the notorious, if not famous, British 
president of South Carolina College ; and as a keen and 
vigorous thinker. Because of his bold stand on economic 
questions, he was made by Friedrich List the subject of 
numerous attacks and harsh criticisms. ^ On the con- 
trary, and naturally too, McCulloch praised his book as 
the best in America. I may be pardoned for giving 

•Cooper, Lectures, ed. of 1826, 13-14. 

'Hirst, Life of Friedrich List, 42, 111, 117, 150, 160, 161, 172, 215, 
235, 263, 283. 



54 THE RICARDIAN RENT THEORY 

some extra space to the presentation of his environment, 
education, and career, because the principles of his eco- 
nomics are so in harmony with the circumstances of his 
life. 

Dr. Thomas Cooper (1759-1840) was born in Lon- 
don, and died in Columbia, South Carolina. He was 
educated at Oxford, where he became proficient in chem- 
istry, and acquired a knowledge of medicine, law, and 
political economy. He and James Watt were friends 
and active members in the Democratic Club of Man- 
chester. 

A threat of prosecution was brought against him for 
the publication of a pamphlet in reply to Burke's Re- 
flexions on the Revolution in France. With Watt, he 
went to Paris, became intimate with the leaders of the 
Revolution, and offered himself as a candidate for a 
seat in the Convention, opposing the Duke of Orleans. 

Coming to the United States at the age of thirty-six, 
he settled in Northumberland, Pennsylvania, where his 
father-in-law, Joseph Priestly, was residing. Only four 
years elapsed before his presence was made known in 
this country through his espousal of Jeffersonian democ- 
racy and his bitter attack on the administration of John 
Adams, for which, one year later, he was fined $400 
and sent to prison under the Alien and Sedition Acts. 
He later declared the acts unconstitutional, won his 
point, and secured a return of his money with interest. 
Upon his release from prison, he became land commis- 
sioner, and a judge of the common pleas. Not lo-ng 
afterward, however, the Senate impeached him for over- 
bearing conduct, and Governor Snyder removed him 
from office. ^ 

s After Cooper's death in 1839, his entire collection of letters and 
personal papers passed to Dr. John Manners, who prepared a two or 
three volume work in commemoration of Cooper, but he could find no 



THOMAS COOPER 55 

He then turned to college work. He became professor 
of chemistry in Dickinson College; later he accepted 
the chair of chemistry and mineralogy in the University 
of Pennsylvania. In 1817, he became professor of chem- 
istry and law in the University of Virginia; two years 
later, the subjects of mineralogy and natural philosophy 
were added to his labors. Three years after he entered 
this university, agitation arose on account of his hetero- 
doxy, which caused him to resign. 

In 1820, he moved to South Carolina, was elected 
professor of chemistry, and, one year later, the presi- 
dent of South Carolina College. While there, he taught 
literature and lectured on political economy in addition 
to his other labors. But he was not free from trouble. 
Because of his radical religious teachings, he was tried 
in 1832 before the Board of Trustees, but was acquitted. 
Pressure upon him was such, however, that he resigned 
from the college in 1833 and devoted the rest of his 
life to the editing and publishing of the statutes of the 
state. » 

The bitter opposition and intense excitement in South 

publisher for it. This material passed to Mistress Ellen Cooper Hanna, 
then to Mistress Fanny Cooper Lesesne, the last living at Battles Wharf, 
Baldwin County, Alabama. During the war, the material was destroyed 
{Southern Historical Association, II, 339). A small collection of material 
on Dr. Cooper's life was donated to South Carolina University in 1907 
(76. 342). See letters of Dr. Thomas Cooper, 1825-1832, American His- 
torical Review, VI, 725-736. 

^ Nat. Ency. Am. Biog., XI, 31. Numerous encyclopedia articles and 
works of reference give his career. The reference just cited gives a 
short, but excellent account of him. Palgrave's Dictionary, I, 408, de- 
scribes his life. But the best account I have found of his career appears 
in the History of South Carolina College, Chap. VIII. President J. W. 
Rivers, speaking before the National Educational Association at Balti- 
more, in presenting the history of South Carolina College, said, "Under 
the second president. Dr. Thomas Cooper, special attention was directed 
to physical science. Educated at Oxford, England, and having been 
an associate of Priestly and a professor of chemistry and mineralogy at 
the University of Pennsylvania, Dr. Cooper brought with him an enthusi- 
astic devotion to this department, and gave it prominence not only in 
the college but in the state. Unfortunately, after being many years 
president, he busied himself with infidel speculation, and on this account, 
notwithstanding his great learning and ability, brought the college to the 
brink of ruin" {The News and Courier, Charleston, S. C, Tues., July 25, 
1876). 



V 



56 THE RICARDIAN RENT THEORY 

Carolina against the tariff of 1827 is well known. The 
history of nullification in that state begins with that 
opposition. The great power of Thomas Cooper was 
exemplified in that opposition. To quote Professor J. W. 
Burgess, "The chief personages of the Commonwealth 
assembled at Columbia [in the summer after the Con- 
gressional session of 1826-1827]. " The principal orator 
of the occasion was the president of the college of the 
Commonwealth, Dr. Cooper, a man of rare powers and 
great learning, an Englishman by birth and education, 
a free trader in his political economy, and a 'States' 
rights' man in his political science. In his speech he 
suggested disunion as preferable to submission to the 
tariff legislation of Congress." ^^ As a result, they 
adopted a resolution that was inflammatory, though not 
so much so as was the professor's speech. 

Indirectly, Cooper's influence seems to have been felt 
in the national Congress. It was claimed that the tariff 
belonged to the domain of the Ways and Means Com- 
mittee of which George McDuffe of South Carolina 
was Chairman. McDuffe was a leader of men. Keen 
intelligence, strong courage, and great prestige were his. 
As is well known by those who have read his speeches, 
he based his arguments for the freedom of trade upon 
the Ricardian theory of rent. Professor Burgess is au- 
thority for the opinion that McDuffe learned much of 
his political economy from Professor Cooper, who "set 
the direction of thought upon such subjects in South 
Carolina and throughout a large portion of the South 
during that period." ^^ Speaking further of Cooper's 
prestige, Professor Burgess said, "A true estimate of 
responsibilities for the events of 1832 in South Carolina 

^o Parenthesis mine. 

Ji Burgess, The- Middle Period, 159. '^^ Ib.j 172-173. Quotation, 173. 



THOMAS COOPER 57 

would probably hold him more culpable than Calhoun 
himself." '' 

Professor Cooper wrote his Lectures on (the Elements 
of) Political Economy when he was sixty-seven years 
of age. Considering the circumstances of his education 
and his maturity when he came to this country, together 
with the fact that his teaching was largely confined to 
the subjects of natural science, there is little wonder 
that his lectures can claim the merit of but little orig- 
inality. The author says, "that he writes not for the 
adept. It was his business to introduce the pupils under 
his care to a full knowledge of the science in all its 
departments ; and he hesitated not to gather his materials 
from every quarter, where they most advantageously 
presented themselves to his view, without always trying 
to throw over them an air of novelty, and sometimes 
without even changing the language of the author to 
whom he stood indebted, when it appeared to him to 
express the reasoning and the principles clearly and 
forcibly." ^* 

In the first year of his lectures, he used Mistress 
Marcet's Conversations, and McVickar's republication 
of McCulloch. He advised those who wished to pursue 
the subject farther to read Adam Smith, Say, Mai thus, 
Ricardo, McCulloch, James Mill, and Cardozo. He indi- 
cates that these were the sources from which his lectures 
were prepared. ^' 

Professor Cooper was an indefatigable worker 
whether on chemistry, medicine, law, agriculture, re- 
ligion, or political economy. His writings refer to numer- 
ous sources. For instance, on population, which we 
will now consider, he referred to, and evidently had 

137&., 173. 

^'' North Amer. Rev., XXV, 409, and Cooper, Lectures, Pref. v-vi. 
^s Cooper, Lectures, 3d ed., Pref., v-vi. 



58 THE RICARDIAN RENT THEORY 

read, Malthus, Godwin, Wayland, Jarrold, Graham, 
Ensor, Grey, Everett, Herbert, ^^ Wallace, Darwin, and 
Townsend. ^^ 

His attitude toward Malthusianism is easy to ascertain. 
He gives a concise statement of the doctrine, and con- 
cludes with these words : "Dr. Malthus has incurred 
much obloquy for these harsh doctrines ; but their man- 
ifest truth and great importance have at length pro- 
duced conviction in the minds of the greater number 
of those who have turned their attention to political 
economy ; and they may now be considered as settled." ^* 

Referring to the claim of Malthus that population 
increases in a geometrical ratio while food increases 
only in an arithmetical ratio, he said, "this being an 
undeniable matter of fact, may be assumed as such to 
form the basis of any reasoning." ^^ 

Contrary to Raymond, Everett, and Cardozo, he 
taught that to the returns of machinery "there must be 
a term where it ends — a maximum." ^° 

As above noted, Everett makes much of the point 
that population is not supported from the same soil 
that it occupies. In reply to this Cooper said, "What 
may be affirmed of any given quantity of land in this 
respect [referring to the law of diminishing returns] ^^ 
may be affirmed of any other, and therefore of all: 
therefore, the proposition is general, that population 
tends to accumulate much faster than the means of sub- 
sistence, upon a limited territory." -^ 

Cooper adhered to the wage-fund doctrine in its true 

"76., 1st ed., 232. 

"lb., 11. 

«/6., 11, 12. Quotation 12. 

w/b., 232. 

20/&., 233. 

^ Parenthesis mine. 

*^ Cooper, Lectures, 1st ed., 233. 



SAMUEL PHILLIPS NEWMAN 59 

sense,^^ and not as it is doctored up and explained away 
by certain later writers. With this deficient weapon, 
he made an attack upon Everett's New Ideas, which 
claimed that an increase of population is a cause of 
abundance. -* His theory of rent is but a restatement of 
Ricardo's theory, so it would be but a repetition to give 
it here. ^^ 

Like McVickar and Cooper, our next author, Samuel 
Phillips Newman (1797-1842), was a professor whose 
interests were mainly in subjects other than political 
economy. He was the son of a minister, a graduate at 
Harvard (1816) and at Andover Theological Seminary. 
He was himself, like McVickar, a minister. After teach- 
ing at Bowdoin for fourteen years, he became principal 
of the State Normal School, Barre, Massachusetts, 
where he remained from 1839 to his death. -^ 

His special interest was in English, which he taught 
and upon which he wrote several works. While at Bow- 
doin (1835), however, he gave lectures and wrote a 
text on the elements of political economy. The Wealth 
of Nations seems to have been almost his only source,. 
and where he departs from it, confusion and contradic- 
tion render the following out of his reasoning a hope- 
less task. 

He superficially disposes of the population problem 
as follows : "The period when the surface of the earth 
shall be so covered with inhabitants that population 
shall equal the means of subsistence, is so distant, and 
all calculations and reasonings relating to this state of 
things so indefinite and shadowy, that the whole sub- 
ject is one of no practical importance." -'' 

^Ib., 239. «/b., 236-237. "^ lb., 13, 32-33, 84-87, 221. 
^^ Appleton's Encyc. Am. Biog., IV, 505. 
" Newman, Elements, 2.o4. 



6o THE RICARDIAN RENT THEORY 

He speaks of rent only in connection with land. His 
theory is simple : products minus costs equal rents. ^* 
lyike Adam Smith, he thinks that rent enters into price. 
Wages, payments for capital, and rents, he makes the 
cost items entering into the price of agricultural com- 
modities. -^ 

A professor of English in a country where there ex- 
isted no rent problem, at least in its political aspects, is, 
of course, not supposed to give the rent problem serious 
consideration. He was yet in his thirties when he wrote ; 
and want of time, his environment, and professional du- 
ties permitted him no more than a passing consideration 
of economic questions. His book is little more than a 
) .. compendium of ideas, somewhat ill-digested, gained from 

a reading of The Wealth of Nations. 

Next in order of consideration is Francis Wayland 
(1796-1865). His parents were natives of England, 
who came to the United States in 1792, four years 
before Francis was born. The father, a Baptist min- 
ister, was away from home much of the time. The 
son received his early training from his mother, "a 
woman of superior mind and discriminating judg- 
ment." ^° He was graduated at Union College at the 
age of seventeen, studied medicine for three years, and 
entered Andover Theological Seminary in 1816. He left 
the seminary to become a tutor in Union College. After 
four years of service, he accepted the pulpit of the First 
Baptist Church in Boston. In 1823, he became famous 
as a preacher. He accepted a professorship at Union 
(1826- 1827), but resigned before the end of the year 

28/&., 275. 29 /ft., 127. 

^Good brief references on Wayland's life are: Apploton's Encyc. Amer 
Biog., VI, 397-398; Ne%u Inter. Encyc, XX, 377-378; Palgrave's Diet., 
Ill, 660; Memoir of the Life and Labors of Francis Wayland by his 
sons. The last named is particularly valuable. 



FRANCIS WAYLAND 6l 

to become the fourth president of Brown University, 
where he served for twenty-eight years. His adminis- 
tration has been called the Golden Age of the University. 
At the age of fifty-nine, he resigned to become the pastor 
of the First Baptist Church, Providence, Rhode Island, 
and to devote himself to prison reform and other social 
work. 

Like the other professors under review, he was not 
primarily an economist. He wrote nineteen books on 
as many subjects, besides numerous pamphlets and news- 
paper articles. His Elements of Political Economy 
(1837) was, as a text, the best work previous to the 
Civil War, and probably as popular as any American 
text on this subject. It survives, and is used as a text 
in some places to this day. Before 1867, as many as 
50,000 copies of his larger treatise and 12,000 of his 
smaller had been sold. ^^ 

Professor Dunbar said, "President Wayland's book 
(1837) is the only general treatise of the period which 
can fairly be said to have survived to our day; and 
this, it must be admitted, owes whatever value it has 
to its manner of presenting for easy comprehension 
some of the leading English doctrines, of which, how- 
ever, it may be doubted if the author ever fully recog- 
nized the bearing." ^^ The author's own statement that 
when his "attention was first directed to the science of 
political economy, he was struck with the simplicity of 
its principles," ^^ bears evidence for Professor Dunbar's 
statement. Ricardo had a different experience. It was 
after Ricardo had produced his great work that he con- 
fessed his inability to find his way through the "laby- 
rinth" of the value problem. Our author said, "Cost, 

3^ Wayland and Wayland, Memoir, I, 389. 

32 Dunbar, Essays, 12. 

33 Wayland, Elements, Pref., iii. 



62 THE RICARDIAN RENT THEORY 

that is, labor bestowed, is the foundation of exchangeable 
value." ^* But he makes the one most important, and 
all pervading principle of his work the law of supply 
and demand. He classifies land as capital, "^ speaks of 
rent as interest,^^ makes the lower margin to depend 
on price rather than the reverse, ^^ and teaches that 
rent enters into price. ^^ 

How can one maintain these principles and still hold 
to the Ricardian theory of rent? If one turns, however, 
to his chapter on rent, it is at once apparent that, so far 
as the description of the doctrine goes, he out-Ricardos 
Ricardo himself. 

His treatment of the principle of population may be 
expressed thus: "Population," he says, "always follows 
capital. It increases as capital increases; is stationary 
when capital is stationary; and decreases when capital 
decreases. And hence, there seems no need of any 
other means to prevent the too rapid increase of popu- 
lation, than to secure a correspondent increase of cap- 
ital, by which that population may be supported." ^^ 
On the whole, however, his teaching supports the theory 
that an increase of capital forms a check to population 
in the form of a higher standard of living. 

Wayland was influenced, evidently, by the Malthusian 
concept of the minimum of subsistence as the regulator 
of population, and by the American idea of a growing 
population causing an increase of subsistence at a faster 
rate than the increase of population. Unlike and con- 
flicting ideas were thus at the basis of his reasoning. 

s*76., 24. 
35/6., 31. 
s«i&., 341. 

^Ib., 355. 
89 7&., 305. 



FRANCIS WAYLAND 63 

Impliedly, his capital fund is reduced to a mere wage- 
fund, with the result that population follows wages. ■*" 
He does not mean the rate of wages, for, ruling out com- 
binations either among capitalists or laborers as ex- 
pensive and unjust, he finds that competition brings 
wages to their proper level. *^ The context makes "prop- 
er level" synonomous with Ricardo's standard wage. It 
follows that the increase of population, together with the 
force of competition would tend to keep wages about 
the same through time. The size of the fund, then, 
rather than the rate of individual wages, would be the 
regulator of population. With Malthus, he teaches that, 
in the United States, population doubles once in twenty- 
five years. And, in the same paragraph, he, in harmony 
with the "Early National Economists" we have reviewed, 
tells us that the earth can produce more than its inhab- 
itants consume. *^ 

I have said that his opinion wavered between the 
English and the American ideas respecting the wage- 
fund. In brief, what were these ideas ? The wage- fund 
idea which enjoyed great vogue in English economic 
literature was only an assumption. A certain fund of 
capital, it was assumed, in the hands of employers, was 
set aside for the express purpose of paying wages. Sup- 
pose in a given time the fund to be 1,000 and the num- 
ber of laborers 100, then 1,000 -^- 100 = 10, or the aver- 
age wage. The point of emphasis was not productivity, 
or the result of the application of labor, but rather that 
the fund set aside was necessarily meted out to laborers 
by the principle of a simple division. The content of 
this fund was capital only. 

Resting upon as superficial a basis and reflecting a 

*"/b., 308. 
*^Ib., 303-304. 
*^Ib., 302. 



64 THE RICARDIAN RENT THEORY 

similar mode of thought, was the subsistence theory, 
which looked not to capital but to land alone as the 
determinant of wages. *'^ 

This doctrine of a predetermined fund for wages 
grew out of the industrial situation in England. Closed 
in by tariff walls, the country was dependent on the 
annual crop for the subsistence of the coming year. 
Close the eyes to consumers other than laborers, forget 
that wages consist of more than food, and the idea of a 
predetermined wage-fund will result. 

American economists, on the contrary, recognized a 
large surplus upon which they could draw at will. So 
far as they reasoned upon a wage- fund basis, they had 
in mind a concept so elastic as to lose the nature of a 
fund. Necessities, in their thought, were not produced 
for but hy population. "Population as a cause of abund- 
ance" pervaded their thought. 

Wayland could not reason clearly upon the problem 
of population because he did not see a difference be- 
tween these points of view. The distinction between 
static conditions and dynamic conditions, he did not 

^ We must allow that wages are paid out of capital, but for this rea- 
son we must not jump to the rigidity of a wage-fund theory. Or let 
us grant the wage-fund ; where does it lead us ? Or how does it aid 
us in our reasoning ? Precisely the same reasoning holds for the exist- 
ence of an interest-fund, or of a rent-fund, or of any other fund, for 
that matter. 

But, it may be asked, why object to this theory, if it is of no signifi- 
cance in itself ? It is not always the importance of a theory in itself 
that demands attention ; its effect upon furthering or retarding other 
ideas is the point in question regarding the wage-fund. Its effects in 
the main, were two. With a superficial analysis that took the appear- 
ance of a truism, it glossed over and hid from view the real problem 
of wages, and thus tended to remove it (the real problem) from discus- 
sion, with the consequence of retarding the development of thought. 

Of a different nature was its other effect: unbending rigidity of the 
fund gave an air of justice to most unjust conclusions. To strikes or 
efforts on the part of particular groiips of laborers to raise their wages, 
the capitalist, with the address of a moralist and with the sanction of 
science, could object on the ground that to the extent some are aided 
others must suffer. On the same ground, workmen were made dependent 
on capitalists, who were regarded by the wage-fund theorists, as the great 
benefactors of the race. Upon the sacrifices of laborers and the self 
restraint of these beneficient capitalists depended the size of the all im- 
portant wage-fund. 



FRANCIS WAYLAND 65 

recognize. Wayland's economics was eclectic. Odd 
moments taken from the numerous cares of busy men 
permit little more than a putting together eclectically of 
ideas from others. Wavering between American and 
English ideas on population, his lines of thought tended 
in opposite directions. 

On the rent problem, Ricardo's emphasis was upon 
fertility, while Thiinen placed particular emphasis upon 
location. ** Wa)dand correctly emphasized equally both 
points of view. He said, "Fertility being the same, pro- 
ductiveness will be as situation; and, situation being the 
same, productiveness will be as fertility." *^ 

His account of the origin, progress, and measurement 
of rent is but a repetition of Ricardo's description of 
rent. *^ Our author gives a splendid and practical dis- 
cussion as to the effects of transportation, markets, and 
climate on land rents. *^ He shows how products reflect 
a price back upon land, but he goes further to show that 
the price of land is materially affected by its beauty of 
situation as well as by the intellectual and moral char- 
acter of the neighborhood. *^ He rightly emphasizes sit- 
uation in city rents; as sites for dwellings, warehouses, 
factories, manufactures in proximity to water falls and 
the like. *^ The rent of mines, he would also have de- 
pend on location as well as on the quality and workable- 
ness of the mine. ^"^ 

Although, in respect to agricultural lands, he holds 
with Ricardo to the differential rent theory, he still 
maintains that rent enters into price. "The price," he 

^Thunen, Der isolirte Stoat, 1st ed., 182. (Der isolirte Stoat in 
Beziehung auf Landwirtkschaft und Nationalokonomie) . 
*^ Wayland, Elements, 340. 
*«Ib., 340-344. 
^ lb., 344-348. 
^ lb., 348-349. 
-^ lb., 350-352. 
K>7&., 352-353. 



66 THE RICARDIAN RENT THEORY 

said, "of a bale of cotton is made up of the rent of the 
land on which it grew, the wages and expense of the 
laborers who were employed in its cultivation, the labor 
and skill of the agriculturalist who superintends the 
labor, the cost of seed, manure, utensils, etc." ^^ This 
statement, however, does not convict him of contradic- 
tion, because his emphasis is on the demand side, and 
it is consequently price that determines the lower margin 
rather than the reverse. Marginal cost, as Ricardo con- 
ceived it, coincides with price ; but Wayland's conception 
is that this margin is the effect of price rather than the 
cause of price. 

The influence of two unlike economics over his mind 
makes him hard to interpret. In seeming contradiction 
to what has been said, he bases the origin and progress 
of rent on the, fact of poorer soils coming under cultiva- 
tion ; ^- again, his assumption is that the productivity 
of land is a fixed number of bushels. ^^ These assump- 
tions, however, are used in rather graphic illustrations 
and are out of harmony with the main tenets of his 
argument. 

Now, if he did hold to the "limited returns" concept, 
as his illustrations seem to indicate, he could not teach 
the tendency of population to double "once in twenty- 
five years" and that "the earth, every year, if it be prop- 
erly tilled, and if capital be properly employed, pro- 
duces more than its inhabitants consume." ^* He did 
not appreciate the law of diminishing returns; and, on 
the whole', he favored a rather rapid multiplication of 
population. 

Following Wayland's first edition of the Elements, 

81J&., 355. 
52/6., 341. 
^Ih., 88-89. 
^Ib., 302. 



HENRY VETHAKE ^y 

appeared Vethake's well written Principles of Political 
Economy (1835). We have seen that McVickar's edi- 
tion of McCuUoch was used by its editor in his class- 
room. Both Cooper's and Wayland's books were com- 
posed of lectures previously delivered by them to their 
classes. And Vethake inscribes his book, "To the numer- 
ous young men who, at different periods during the 
last sixteen years, have attended his lectures on political 
economy." ^^ Like Wayland, Vethake was a professor 
who was not in close touch with the industrial realities 
of his country. He was not even an economist primarily, 
as will be seen through a brief review of his career. 

Henry Vethake (1792-1866) was born in Essequibo 
(now Demerara), British Guiana, and he died in Phila- 
delphia. When he was four years of age, his parents 
moved to the United States. At Columbia he took the 
degrees A.B. (1808) and A.M. (1811). Subsequently 
he studied law. He was an instructor in mathematics 
and geography in Columbia College in 1813 ; and, from 
1813 to 1821, he taught mathematics, natural philosophy, 
chemistry, and mechanical philosophy at the College of 
New Jersey (now Princeton University). He left that 
post to become professor of natural philosophy in Dick- 
inson College, a position which he held from 1821 to 
1829. He was professor in the University of the City 
of New York (now New York University) in the years 
1832 and 1833, during which time he taught mathe- 
matics and astronomy. From 1834 to 1836, he was 
Rector of the board of trustees and President of Wash- 
ington College (now Washington and Lee University), 
where he taught moral philosophy and mathematics. 
From there, he went to the University of Pennsylvania 
as the professor of moral philosophy and intellectual 

^ Vethake, Principles, iii. 



68 THE RICARDIAN RENT THEORY 

philosophy (1836-1855). He was Vice Provost from 
1846 to 1854, and Provost from 1854 to 1859. He 
became professor of higher mathematics at the Phila- 
delphia Polytechnical College in 1859, where he served 
until his death. He received the honorary degrees of 
A.M. from the College of New Jersey (1816), the same 
from Dickinson (1827), and LL.D. from Columbia 
(1836). ^« 

The first part of his preface states his intention to 
avoid reference to other writers. The assistance of ref- 
erences, however, is not needed to show us that in all 
but a few instances his thought is the same as that held 
by McCulloch. The one author to whom he makes an 
important reference, and that is an extended one, is 
McCulloch. " The fact that he edited McCulloch's Dic- 
tionary of Commerce evidences further appreciation on 
his part, of the writings of that author. He was a free 
trader, ^^ and his views on international commerce are 
little more than a re-wording of Ricardo's teachings. 

He thinks of the total income as being divided into 
the three shares of rent, profits, and wages. By far 
the larger portion of the people must, he teaches, depend 
on wages for support; therefore the great regulator of 
population is wages. ^^ 

He said that wages were regulated by the law of sup- 
ply and demand, but it was physical supply and physical 
demand that he had in mind. By the supply of labor 
he meant the number of laborers, and the number of 
laborers was in proportion to the whole population. The 
demand for labor "is measured by that portion of the 
capital of a country which consists of wages, and which,. 

^ Palgrave's Dictionary, III, 617-618. 
^ Vethake, Principles, 409-410. 
w/b., Chaps. II-XIV. 
* Vethake, Principles, 99. 



HENRY VETHAKE 69 

again, is proportional to the whole amount of that cap- 
ital; it will follow that the rate of wages is dependent 
on the relation which the capital of a country bears to 
the numbers of the people." ^*^ Vethake's mathematical 
training well suited him to an arithmetical wage- fund 
theory, which he persistently maintains throughout his 
discussion of population. Assuming this as a truth be- 
yond debate, he turns his attention to forces regulating 
the size of the dividend and of the divisor. 

Turning now to forces which keep population in abey- 
ance to the fund prepared for it, he presents with clear- 
ness and force, but adds nothing new to, the theory of 
the positive and preventive checks. ^'^ He places depend- 
ence chiefly upon the elevating of man's desires and 
standards of living. To this end, he advocates the ele- 
vation of morals, the increase of foresight through edu- 
cational processes, progress in arts, and governmental 
interference regarding the well being and marriage of 
the poor, ignorant, and unfit.^" 

His discussion on population centers about the word 
"tendency." He uses the term, he says, in analogy to 
the use made of it in mechanical philosophy from which 
it is borrowed. He said, "A body, placed in one of the 
scales of a balance, is very properly said to tend towards 
the earth." ®^ He further said, "In morals also, we con- 
tinually compare the influence of motives on the mind 
with the action of mechanical causes on matter." ^* His 
reasoning brings him to the result, "that this tendency is 
always in exact proportion to the force of the check 
which is presented by the difficulty of procuring the 
means of support; and consequently, that it is greatest, 

«0 7&., 100. 
61/6., 101. 

«=/6., 110-115, Chap. VII. 
«3 7b., 108. «/6. 



70 THE RICARDIAN RENT THEORY 

not when population increases most rapidly, but, on the 
contrary, when this increase is the slowest." ®^ 

It is difficult to determine just what Malthus had in 
mind when he used the term "the principle of popula- 
tion." Vethake makes his use clear, if it can be said 
that his definition of "tendency" is clear. "This tend- 
ency," said he, "I shall hereafter designate as the princi- 
ple of population." ®^ 

According to his use, the word "tendency" indicates 
nothing as to actual movement. If this tendency, as he 
claims, is in exact proportion to opposing force, and 
greatest when the increase of numbers is slowest, it 
follows that, if counteracting forces were nil, tendency, 
which is in exact proportion, would also be nil. Sec- 
ondly, if tendency is greatest when increase is slowest, 
it would be less when increase is more rapid and nil 
when increase in numbers is most rapid. Our author, 
to use his own words, wished tendency to be "employed 
in perfect analogy to the use made of the term tendency 
in mechanical philosophy." ®'' Then, a train running 
at the fastest possible speed would have no tendency 
to do so, while one standing would have the greatest 
tendency to move, or this same reasoning will apply 
to his example of the weight on one of the scales of a 
balance. 

Without further comment on the ambiguity of the 
word "tendency," without considering the inappropriate- 
ness of the analogies between the moral laws regulating 
population and the physical laws operative in mechanical 
philosophy, and without showing that analogies from 
biological science might be more appropriate, let us turn 
to his views on rent. 

«5 lb., 109. 
'"lb., 108. 



HENRY VETHAKE 71 

Respecting the agents which produce rent. Professor 
Vethake seems not to be limited by the orthodox teach- 
ings. In fact, he saw glimpses of, and at times gave 
expression to, the rent problem in its broader aspects. 
But, after stumbling into the right, he unfortunately 
turned to the wrong. He mentions agents producing 
rent to be : land, mines, fisheries, manufactures, stands 
for business, ^^ and monopolies. ®® His discussion of 
capital, ^'^ as well as his definition and treatment of rent, 
in reality classifies land as capital. 

He does not formally define rent, but the following 
quotation is in strict keeping with his discussion of 
the subject : "Political Economists have found it expe- 
dient to separate from the profits received in any employ- 
ment that portion by which they may exceed in amount 
those yielded to the capital invested most disadvan- 
tageously in the same employment, and have designated 
such excess* by the name of rent. All land, consequently, 
yields rent, excepting the land just taken into cultivation ; 
and so too does every portion of capital which is applied 
to the land before cultivated, with the exception only 
of what is the last applied." '^ This makes rent a por- 
tion of profits. It is the excess over costs. This is 
further illustrated when he says that, if $500 be paid 
for the use of a farm, it is an error to denominate the 
whole payment as rent, since a portion is payment for 
the capital in the land. ^- He speaks of a lease being 
composed of usual profits and of extra profits or rent. 
Vethake insists, elsewhere, that rent is a product of 
labor.^^ 

^Ib., 68. 

«» li., 70. 

™/fe., Book I, Chaps. IV, V. 

•^Ib., 70. 

"76., 71-72. 

»3/b., 74. 



^2 THE RICARDIAN RENT THEORY 

So far, he has made rent a payment by one person 
to another, as Ricardo did when he was contending 
that rent does not add to the weaUh of a nation. Also 
he accompanies Ricardo in making two uses of the term 
rent when he claims that, if the farmer till his own soil, 
the excess is rent. "* This confusion of the strictly 
economic concept of yield with the contractual or legal 
concept of rent, pervades economic literature and de- 
feats clear reasoning on that most fundamental problem, 
proportionality. 

L,ike Ricardo, he finds that cost of production under 
the most unfavorable circumstances determines price. '^^ 
This enables him to agree with Ricardo that rent does 
not enter into price. '^® 

On diminishing returns, he takes, as does Ricardo, a 
static view regarding the instrumentalities of production 
and a dynamic view of the growth of population. Both 
apply the law intensively as well as extensively. '''' 
Vethake would make the law applicable to all rent-bear- 
ing agents ; "'^ but, in conflict with some of his state- 
ments, he expresses belief in constant returns to manu- 
factures. 

A treatise on this group of economists would be incom- 
plete without mention of the work of Marcius Wilson. 
This author wrote a volume on Civil Polity and Political 
Economy (1838), in which he followed very closely the 
work of President Wayland. His was a brief high school 
text, in which he attempted two fields of such propor- 
tions as to make impossible the development of a theory 
of rent. 

He teaches that land is capital. He classifies tilled 

'^ Cf . Ricardo, Principles, 48; Vethake, Principles, 71. 

'^Vethalce, Principles, 69-70. 

™/&., 70. ''■'lb., 69. ''^Ib., 68-69. 



HENRY VETHAKE 73 

land as productive capital and as fixed capital. '^^ "Rent, 
or the price paid for tlie use of land, is regulated by 
the same principles that regulate the interest upon other 
kinds of capital." *° The principle regulating interest 
is, he teaches, the law of supply and demand. He would 
make due allowance for risk. *^ 

On the whole, his ideas were in harmony with those 
of the more optimistic American economists respecting 
the population problem. 

The economists reviewed in this chapter were some- 
what confused in their reasoning upon the rent problem. 
Their writings followed closely the form of expression 
used by Ricardo, and they copied his differential method 
of explaining land rent. But the comparison between 
their thought and that of Ricardo ends with the outward 
form of presentation. They mistook the form of his 
writing for its content, and gave little more than a veneer 
of the Ricardian theory of rent. They took the law of 
supply and demand, not without many exceptions, as 
the regulator of value ; and consistently with this posi- 
tion, they reasoned that labor cost could affect value 
only by affecting supply. They defined Malthusianism 
and gave it favorable comment ; but, in the course of 
their reasoning, they turned deliberately from that doc- 
trine, and favored a larger population to supply the 
industrial need of America; they not infrequently re- 
garded land as capital, and spoke of rent as synonymous 
with interest; they regarded the margin as price-deter- 
mined rather than price-determining, and, in conse- 
quence, they regarded rent as a part of the cost of pro- 
ducing goods. 

"* Wilson, Civil Polity and Political Economy, 130, 131. 
8»/&., 181. 
«i/&., 177-186. 



74 THE RICARDIAN RENT THEORY 

The confusion in thought of the writers who have 
been reviewed, bears evidence of two unhke influences 
— the knowledge that they acquired from books was 
gleaned from the English texts, whereas the practical 
problems that they faced in the new world were such 
that the English writings provided no solution. The 
following chapter will be devoted to the writings of 
J. N. Cardozo, a capable opponent of Ricardo, whose 
ideas were of such merit as to make his treatment worthy 
of a separate chapter. 



CHAPTER V 
GEORGE TUCKER 

GEORGE TUCKER (1775-1861) of Virginia 
should be ranked among the strongest Ameri- 
can economists prior to the Civil War, Econ- 
omists have not forgotten him ; they never knew him, 
A few specialists in statistics remember his work in that 
field, but the students of economic thought make no 
mention of his theoretical writings. He was too far 
in advance of contemporary thought to be appreciated; 
and his works were out of print long before they could 
have been justly appraised, I shall present the chief 
facts on his life and writings, study some of his funda- 
mental principles, and present in detail his reasoning on 
the problem which interested him most — the rent 
problem. 

He was born in Bermuda and died in Virginia, He 
was inspired by his uncle. Judge St. George Tucker, 
to attend William and Mary College, where he was grad- 
uated at the age of twenty-two. Tucker was admitted 
to the bar, and practiced at Lynchburg until he entered 
Congress in 1819, where he served for six years. He 
then accepted a professorship of moral philosophy and 
political economy in the University of Virginia where 
he remained from 1825 to 1845. ^ ^^'s early writings 
cover a v/ide range of subjects, ^ 

iPalgrave, Diet, III, 568; Nat. Encyc. of Amer. Biog., VII, 521. 

* He wrote on slavery, on subjects of taste, and a novel on the Val- 
ley of Shenandoah, The Life of Thomas Jefferson, a four volume history 
of the United States, Essays Moral and Philosophical. His principal 
works on economics are : Law of Wages, Profits and Rent Investigated, 
(Phila., 1837) ; Theory of Money and Banks Investigated, (Boston, 



84 THE RICARDIAN RENT THEORY 

Tucker was a scholarly man who labored for the 
cause of science and a statesman whose power as a 
debater in Congress was widely recognized. His search- 
ing work on statistics and his American History of four 
volumes demonstrate strong ability in analysis and 
method. His pleasing style was supported by a careful 
organization of facts. The motive of his activity was 
that public opinion might give to right thinking the 
form of law. 

While in Congress, Tucker was In harmony with Pres- 
ident Madison's wish for centralization in Congressional 
legislation. He was an influential member of the com- 
mittee to consider and to favor that cardinal act of the 
administration, the United States Bank Act of 1816. 
The purpose of his chief theoretical work, Wages, 
Profits, and Rent (1837) was to show the general inap- 
plicability of Ricardian economics and to treat construc- 
tively the problems of wages, profits, and rent. 

What was his estimate of Ricardo? Almost a century 
ago, his estimate of David Ricardo was the same as that 
held by many leading thinkers of to-day. "He [Tucker 
speaking of himself] has long been of opinion that Mr. 
Ricardo, though possessing merit of a very high order 
as a writer on poHtical economy, and entitled to all his 
reputation for a thorough knowledge of the subjects of 
money and finance, is mistaken in his elementary prin- 
ciples of the science ; that the origin and progress of 
rents admits of a more simple and natural explanation 
than he has given; that his theory of wages is incon- 
sistent with itself, and that of profits contradicted by 
the whole history of capital in the civilized world." ^ 

1839) ; Progress of the United States in Population and Wealth in Fifty 
Years, (N. Y., 1843) ; Correspondence with Alexander S. Everett on 
Political Economy, (1845) ; Banks or no Banks, (N. Y., 1857) ; Political 
Economy for the People, (Phila., 1859). 

'Tucker, Wages, Profits, and Rent, Pref., iv. 



GEORGE TUCKER 85 

The theory of value was his starting point in his at- 
tack upon Ricardo. Some portions of his writings on 
this subject read Hke pages from the recent psychologi- 
cal economists. "Value," he said, "in its largest sense, 
means the feeling with which we regard whatever can 
render us benefit or afford us gratification. In this 
sense, it is an emotion of our minds comprehending all 
that can impart pleasure to our senses, our tastes, or 
desires; as health, talents, friendship, reputation, land, 
money, and goods. It varies according to the endless 
diversities of objects, and of human tastes or opinions, 
and it is susceptible to all degrees of intensity, from a 
simple wish to the most passionate desire." * 

Epitomizing his introductory chapter, we find that 
self-love seeking gratification is the motive for ex- 
changes. ^ Differences in individual estimates cause us 
to give objects for those whose "real or imaginary prop- 
erties" are preferable. The fact of exchange does not 
indicate the value that either party sets on either com- 
modity, "since each might have been willing to give 
more for that he received, or take less for that he trans- 
ferred." The case is different in market price, where 
the mutual efforts of competitors settle down on uniform 
terms. His thought is that individuals, in buying and 
selling, through bargaining come to readjust their val- 
uations until their estimates are made to conform to a 
common standard, the market price. 

Then, in a market, each commodity is evaluated in 
terms of some other, "that is to say, neither commodity 
can be estimated without estimating both." He says 
in substance that the products of human labor, accord- 
ing to the principle of self-interest, frequently will ex- 
change in proportion to the amount of labor expended 

*Ib., 1-2. 6 gee pages 1-13. 



86 THE RICARDIAN RENT THEORY 

on their production. "This has been called the natural 
price of this class of commodities." But the market 
price varies from the natural price according to the law 
of supply and demand. At this point, his ideas of the 
variation of the subjective forces on the demand side 
are indeed modern, and are indicative of his philosophi- 
cal training. 

As for that class of commodities produced wholly or 
partly by nature, he finds their value to be determined 
"by the pleasure they confer" and the "insufficiency of 
their supply." "Of the same character are the finer 
products of art, as the pictures and statues of celebrated 
masters, secrets in manufactures, and patented inven- 
tions." These are sometimes called monopoly values. 

Value furthermore varies with distance from the mar- 
ket. The cost of transportation must be deducted from 
market prices. This explains why gold and silver, so 
well suited for transportation, are more uniform in 
value throughout the world than are more bulky or per- 
ishable goods. Different place-values "give rise to an 
active internal commerce." Good roads and canals that 
lessen expenses of transportation conduce to a greater 
uniformity of place-values as well as to public pros- 
perity and happiness. 

As measures of value, he treats of the variability of 
labor, corn, and the precious metals. He adds signifi- 
cantly, "Value being an emotion of the mind, and not 
always exhibiting the same outward signs, in proportion 
to its strength, is incapable of exact measurement." 
Approximations are necessary, and, with proper caution 
and diligence, are attainable. 

He thus adhered to the individualistic or subjective 
concept of value. Consistent with the concept of sub- 
jective value, he thought that it is not necessary for a 



GEORGE TUCKER 87 

commodity to have real utility in order that we attach 
value to it; it suffices if it has imaginary properties capa- 
ble of rendering gratification. The value we attach to 
a commodity depends upon its utility (real or imaginary) 
and upon the strength of our desires for the anticipated 
gratification. 

His value-concept may be summarized to read : value 
is subjective, being the importance which the mind at- 
tributes to an objective good or service. It varies with 
the intensity of desire. Goods need not necessarily have 
utility to be valued; it is enough if we think they have 
utility. People think more or less alike; therefore, they 
tend to adjust their valuations to common standards. 
Exchanges on the market are due to differences in indi- 
vidual valuations. Although he denies the cost of pro- 
duction as a cause of value, yet he would say that com- 
petition so works as to cause reproducible commodities 
to exchange in proportion to their cost. 

Consistent with his subjective theory of value, Tucker 
reasons that the primary force in regulating population 
is volitional control. He undertakes to demonstrate the 
effects of volitional control by statistics. 

In treating the principle of population. Tucker will 
be found more conservative than his contemporary 
countrymen, whose dream of a vast population and of 
an intensified division of labor over a diversified field 
of industry would cause a vast augmentation of wealth. 
This view caused, on the part of many Americans, the 
most extreme dissent from Malthusianism and a very 
exaggerated desire for a rapid growth of population. 

H. C. Carey follows in the lead of Herbert Spencer 
in maintaining that the forces destructive of population 
and preservative of it are such as to bring about and 
to maintain an equilibrium between the numbers of peo- 



88 THE RICARDIAN RENT THEORY 

pie and the means of their support. This was a biologi- 
cal theory. Tucker's statistical study of population led 
him to a similar conclusion. "We see by the preceding 
tables that the natural increase of the population is in- 
versely as its density." ^ Taking the examples of Massa- 
chusetts, New York, Virginia, Tennessee, and Ohio, he 
endeavored to demonstrate in each case that the rule 
of natural increase acts uniformly, that is, we perceive 
the falling off in the rate, not only in forty years, but 
in ten year periods. "What is true of these states, will 
be found true in the others ; and there are not more 
than two or three cases, out of nearly a hundred, in 
which the comparison can be made, that the proportion 
of children, and consequently the rate of increase, is 
not less at each census than at the census preceding. '' 
From these figures he predicted that the population of 
continental United States would be 80,000,000 ^ in 1900, 
whereas it was 74,000,000. 

This theory was not first announced by Tucker. The 
English author, M. T. Salder, had conceived the idea, 
and had published two large volumes in its support seven 
years prior to Tucker's publication. Salder attempted 
to prove by statistics that population increases inversely 
as its density. His work was deficient and did not 
survive. 

Tucker thought that Malthus had over-rated the pro- 
pensity of man to increase, and that he had under- 
rated the checks to population. In his opinion, popular 
education, good government, and laws which cherish 
individual self-respect, are the best means of lessening 
the number of the poor. ® 

He turns from the teachings of Malthus on popu- 

' Tucker, Progress of the 77. S. in Population, 105. 

"^ lb., 105-106. 8 26., 106. 

8 Tucker, Political Economy, 222. 



GEORGE TUCKER 89 

lation to Ricardo's theory of wages. As a basis for 
his discussion, I will briefly review Ricardo's theory of 
distribution. Income is divided into three shares : rent, 
profits, and wages. The surplus or rent goes to the 
landlord and the residue is divided between labor and 
capital. Population tends to out-strip the means of sub- 
sistence; therefore — because of an increasing surplus or 
rent — a share diminishing in proportion to the increase 
of population and capital is left for division into wages 
and profits. Wages will not be diminished; therefore, 
profits must be lowered. 

Tucker begins the discussion of wages with the asser- 
tion that labor is not a cause of value but a measure of 
it. Like Ricardo, Tucker overlooked the element of time 
which vitiates the labor theory either as a cause or as 
a measure of value. This is the more remarkable in 
Tucker's case because even Ricardo had made numerous 
exceptions to his labor-value concept, including a recog- 
nition of the time element. Moreover, Malthus had 
given a valuable criticism on this point; and, only three 
years prior to Tucker's publication of 1837, John Rae, 
with a master's hand, had set forth the principle of 
time-value. 

Tucker argues that value depends on scarcity and 
utility; therefore, labor-cost or any other influence can 
affect value only by affecting supply. He emphasizes 
the importance of the law of diminishing returns on 
the limitation of supply. The modes of industry and 
the nature of consumption remaining the same, real 
wages must decline with an increase of population 
beyond the point of the best adjustment of the factors 
of production. Because of differences in the appor- 
tionment of productive factors "a laborer in the United 
States can earn a bushel of grain in a day, in England 



90 THE RICARDIAN RENT THEORY 

or France scarcely a peck, and in India, often a quart 
of rice." ^" 

In this connection, he gives a most illuminating dis- 
cussion on the relation between real wages and the 
nature of consumption. "Subsistence, it must be recol- 
lected, is not a constant quantity, as many who have 
reasoned on this subject seem to consider it, but is 
capable of great variation, whereby the same soil is 
capable of supporting widely different numbers." ^^ A 
given soil of one square mile that would support 80 
persons who consume animal food abundantly, will sup- 
port 120 persons who consume animal food more spar- 
ingly, 160 persons who subsist chiefly on grain, and 480 
persons who subsist on potatoes. In the first case, one 
person consumes the product of 8 acres ; in the second, 
51-3 acres; in the third, 4 acres; in the fourth, i 1-3 
acres. ^- 

The pressure of increasing numbers on the means of 
subsistence causes the different classes to adjust their 
consumption; and population will be increased or 
checked as determined by this adjustment. ^^ Consump- 
tion remaining the same, numbers will increase at a rate 
not greater than the improvements in husbandry. A 
change to a lower grade of consumption means a diminu- 
tion in real wages. This tends to take place with an 
increase of numbers beyond the point of diminishing 
returns. This tendency may be checked or counter- 
balanced by improvements in husbandry, or by the intro- 
duction of the turnip, drill husbandry, or the potato. ^* 
Tucker attacks Ricardo's proposition that wages rise 
as labor and capital are employed on more inferior soil, 

M Tucker, Wages, Profits, and Bent. 16-21. Quotation, 21. 
11/6., 21. 
^Ib., 22-23. 
^Ib., 23. 
"76., 24. 



GEORGE TUCKER 91 

or that the natural price of labor has a tendency to rise 
because of a rise in the price of corn. Ricardo states 
that wages must rise in order to support the same num- 
bers in the same degree of comfort. ^^ In justice to 
Ricardo, it should be noted that he meant money-wages 
rather than real wages. Tucker, however, assumes 
Ricardo's statement to refer to real wages ; and, upon 
this assumption, he makes the following statement : "It 
will not be difficult to show that this theory is at once 
contradicted by the facts and inconsistent with itself." ^® 

Tucker teaches that a rise of raw produce means a 
fall in natural wages^ because the only intelligible idea 
of a rise in exchange value is that the same commodity 
will purchase more labor. He holds to the quantity- 
theory of money, and claims that more money, or better 
substitutes for it, relative to the need for money, will 
cause a rise in prices and money-wages, although their 
relative purchasing power would be unaffected. 

"The very process which Mr. Ricardo assumes to 
take place to raise the price of raw produce supposes 
a fall in the price ^" of labor." ^® Ricardo assumes that 
the surplus goes as rent ; that there is a common rate 
for both wages and profits which is determined on the 
most unfavorable soil; and that it is the product brought 
forth under these most unfavorable conditions that fixes 
the price of raw produce. This means that, as popula- 
tion grows, rents will increase while natural wages must 
fall. Tucker says that the very fact of this lower soil 
coming into cultivation must mean a previous fall in 
the price of labor or capital, or both. "Raw produce 
does not rise because inferior soils are cultivated, but 

1S7&., 32-34. 

19/&., 34. 

!''■ Hp dops not adhere in this statement to the money-definition of price. 
M Tucker, Wages, Profits, and Rent, 35. 



92 THE RICARDIAN RENT THEORY 

they are cultivated because raw produce has risen; and 
the effect of their cultivation is to lessen or to arrest 
the rise rather than to prod^ice it." ^^ After illustrating- 
the point, he said that Ricardo's theory is "the same 
thing as saying that the fall of labor causes the rise of 
labor." 2« 

Tucker says, "Mr. Ricardo has perhaps been betrayed 
into a theory so inconsistent and unintelligible by assum- 
ing the wages of the laborer to be a constant quantity, 
or rather the amount of raw produce necessary for the 
maintenance of himself and family." -^ But, continues 
Tucker, an increase of population will result in a cheaper 
subsistence whereby the same soil will feed more people. 
"The human stomach must be filled; but it makes a 
great difference whether it be filled with beef, or bread, 
or potatoes." ^- 

Despite the accuracy of Tucker's observation, his reply 
is incomplete in that he overlooks Ricardo's point that 
the price of labor must be high enough to enable the 
laborers, one with another, to subsist and perpetuate 
their race, without either increase or diminution, from 
which it follows that an increase of rent tends to dimin- 
ish profits rather than wages. -^ An additional criticism 
was therefore needed by Tucker to make his case; 
namely, that profits would tend to disappear and the 
consequent discouragement of capital would take the 
very foundation from under both wages and rent. This 
would occur should a standard of living be maintained, 
as Ricardo claims, and should population continue to 
increase. Diminishing profits are truly disheartening; 
but the resulting no-profit stage, to which Ricardo's 

19J&., 35-36. 

^Ib., 37. 

»/&., 37. 

22/6., 38. 

^* Ricardo, Political Economy, Ch. V. 



GEORGE TUCKER 



93 



premises and reasoning naturally lead, would arrest the 
resort to inferior soils. Too low a rate of profit encour- 
ages the final consumption of capital. 

On the question of slave labor, much to the credit of 
a Virginian of his day or much to the credit of an Amer- 
ican, North or South, he, without prejudice, weighs the 
arguments on both sides and comes to the conclusion 
that the system of slavery "cannot exist in the most 
advanced stages of society." Speaking of the South, he 
said, "As soon as those states aire supplied with as many 
as can work their lands to advantage, the emancipation 
of slaves, occasioning but a small loss to any, and prov- 
ing a positive gain to some, it will be impossible to pre- 
vent it." ^* 

On the concept of capital and of profits resulting 
therefrom. Tucker presents a suggestive though con- 
fused discussion. He taught that capital results from 
saving. He conceived capital as a productive agent such 
as land and tools, but he shifted to the idea of capital as 
value in the discussion of profits as a rate per cent. 

His definition reads, "Capital is that portion of use- 
ful products which has been saved out of the former 
profits of labor or land." This implies an advance over 
the Classical teaching that capital is a result of labor, 
in that it allows for land rents to be converted into cap- 
ital. He continues, "It thus arises from the excess of 
production beyond consumption, and consists of ma- 
chines, tools, provisions, manufactures of all kinds, and 
money — of every material product, in short, that has 
exchangeable value." -^ He goes on to say that, "Land 
itself must be regarded only as a species of capital 
and the profit it yields in the form of rent, 
will have a proportionate effect on the price, so that 

2* Tucker, Wages, Profits, and Rent, 49, and his Political Economy, 89. 
^Tucker, Wages, Profits, and Rent, 51. 



94 THE RICARDIAN RENT THEORY 

as the ordinary profits of capital fall, the price of land 
will rise. ... If the profits of capital are five per 
cent, land will sell for twenty years' purchase, . 
etc." 26 

At times, he speaks of land and capital as different; 
yet he finds that all of these agents obey the law of 
diminishing returns, and that they are governed by the 
same economic principles. 

He teaches that land rent and profits obey the same 
laws. In a static view, there is a monopolistic ^^ limi- 
tation to the scarce uses of capital at a given time pre- 
cisely as in the case of land. At this point, his reasoning 
clearly foreshadows the recent concept of quasi-rents. 

The demand for capital arises out of the cost and 
the length of time required to produce it as compared 
with the temporary needs for it. Demand is made for 
capital because of the numerous uses for it, because of 
its productive power, and because of its limited supply 
due to its being created only by encountering the natural 
desires of men for present enjoyment. ^^ New develop- 
ments, such as the building of a railroad "^ or the employ- 
ment of new lands, make demands for capital. 

The supply of capital, he says, is limited by the 
scarcity of peculiar skill, or where the method of fabri- 
cation is a secret, or where the law precludes competi- 
tion, as in the case of exclusive rights secured by inven- 
tions. The natural desire for present consumption, and 
the fact that only a few can meet the large costs re- 
quired to produce some forms of capital, are likewise 
conditions that limit the supply of capital. Because 
the demand for capital is quick whereas the production 

^Ib., 71. 

^ "Monopoly" is here used in the sense of scarcity. 
^ Tucker, Wage's, Profits, and Bent, 51. 
^Ib., 61-63. 



GEORGE TUCKER 95 

of it is slow, it generates a surplus value precisely as 
does land or any limited agent. ^° 

Rent and profits are the temporary and scarce uses 
of land and capital that command a price in the mar- 
ket. ^^ He maintains that rent is a monopoly price for 
the scarce uses of land; and, because of these forces 
which limit the supply of capital, he likewise finds that 
profits are due to monopoly. 

The differential theory, in his judgment, applies uni- 
formly to profits and land-rents. His reasoning is, that 
capital will first be employed in the most productive 
uses and that additional capital will find less remunera- 
tive employment. '^ This is, of course, a technological 
concept of capital, for the value-concept forbids such 
different rates of return to capital. 

At this point, the author's treatment of profits be- 
comes confused and inconsistent. He says that capital 
can always be invested in land, but that such an invest- 
ment is only a transfer and not a creation of capital ; 
therefore land is a kind of balance wheel to steady the 
rate of profits. ^^ But he says that a resort to inferior 
soil tends to raise profits because a new and greater 
demand is made for capital. ^* 

Turning now to his criticism of Ricardo on profits, 
we find the conclusion that, after a certain point is 
reached in the apportionment of population to natural 

30/6., 54. 

SI 7b., 57. 

^Ib., 59-61. 33/?,,_ 7i_ 

3*/&., 72. We may criticise Tucker at this point; for, if land under 
cultivation be the regulator ior the level of profits, it must be marginal 
land, because all the surplus is taken away in the form of rent. Then, 
if marginal land regulates the level of profits, how can this level go up 
when the margin goes do^vn by reason of resort to inferior soil? This 
reasoning makes the supply of capital on lower margins have the unlike 
effects of both lowering and raising profits. This contradiction, however, 
is not quite so glaring when we consider that the resort to inferior 
soils is a dynamic concept, and that the differential concept is static, 
referring to lands or different land-qualities under cultivation at the 
same time. 



96 THE RICARDIAN RENT THEORY 

resources, a diminishing portion of raw produce will 
go to labor. He advances the view that capital has the 
advantage of labor, that wages will be lowered relative 
to profits because the laborer must live and will abate 
in his wages rather than go without food. Ricardo, on 
the contrary, had argued that wages will rise with an 
increase of the price of corn whereas profits will de- 
crease. Tucker says that the competing uses for capital 
will tend to keep profits from diminishing. Referring 
to Ricardo's theory, he says, "Corn can only be said to 
rise when it will exchange for more labour. 
In the same degree that corn rises is labour depreciated. 
If the same quantity of corn could purchase no more 
labour than before, in what sense could it be said to 
rise ? Corn must be compared with something else, when 
we speak of its change of value, and it is only with 
labour . . . that it can be compared." ^^ 

One finds at least three unlike ideas in Tucker's treat- 
ment of profits : the differential idea, the temporary 
monopoly idea, and the cost-of-production idea. In 
keeping with the literature of his time, the word "profits" 
expressed no definite concept to Tucker. Profits was a 
blanket term covering that portion of income not in- 
cluded under wages or land-rent. Following his dis- 
cussion of profits, he turns to the problem of land-rent. 

Land-rent to him was a contractual payment made 
by one person to another for the use of land. It pre- 
supposes private property in land ; therefore rent could 
not exist in the early stages of society. Rent depends 
on fertility and on economic location. The value of 
the products of land must exceed their cost of produc- 
tion in order that land may yield a rent. "Fertility is 
then an essential prerequisite, and different qualities of 

sE Tucker, Wages, Profits, and Rent, 68-69. 



GEORGE TUCKER 97 

soil, under similar circumstances of situation, will yield 
rent in proportion to their respective degrees of produc- 
tiveness." ^^ 

After thus, like Malthus, emphasizing fertility rather 
than the niggardliness of nature as the cause of rent, 
he proceeds to remark, as does Malthus, on "the rela- 
tive scarcity of fertile soil as necessary to the existence 
of rent." If land were as abundant as air or light, it 
would be a free good. But land will have a value in 
a new country before it begins to yield rent, because 
provident individuals anticipate a future earning capac- 
ity due to the natural increase of mankind, for the same 
reason that value is attached to young animals or to 
a share in a promising enterprise which is a present 
charge. "' The number of years' rent to determine the 
price of land is ascertained by the rate of profits. ^^ 

There is an elastic limit to the supply of land; con- 
sequently, after the land is occupied, an increase of 
numbers will cause either a diminution in consumption 
or an increase of production through intensive cultiva- 
tion. Improvements in husbandry that enable a given 
expenditure of labor to produce more, will tend to main- 
tain a high exchange value of labor in terms of raw 
produce. "But though wages will not fall, rents will 
rise, inasmuch as the same soil is made to yield a greater 
return." "^ Tucker here refers to commodity-rent and 
commodity-wages, and argues that rents rise faster than 

wages. 

He thinks, however, that in only a few rare cases do 
improvements keep pace with the progress of popula- 
tion, and that in general the increase of population com- 

s^ Tucker, Wages, Profits, and Rent, 94. 
38/6., 94-95. 
»/b., 95. 
«>Jl>., 98. 



98 THE RICARDIAN RENT THEORY 

pels diminished consumption, and the substitution of 
coarser for dearer commodities. *^ The value of wages 
falls, usually, in comparison with the value of raw 
produce, "in consequence of the increased competition 
of the labourers; and, as the same amount of raw 
produce will progressively command more and more 
labour in the market, rents will rise in proportion.''*^ 
It is clear that, to Tucker, a rise in rent means a rise 
in proportion to labor. 

Reasoning evidently on the entrepreneur cost basis, *^ 
he said : 

By reason o£ the fall in the price of labour, soils of inferior 
fertility may then repay the cost of cultivation, which they 
would not have done at the previous rate of wages. The addi- 
tion to the amount of raw produce thus made, retards the 
further decrease of wages. . . . But if the soil was_ of 
uniform fertility, then, when it was all taken into cultivation, 
the means of subsistence for further accession of numbers 
could be furnished only by one of the two first mentioned 
modes, that is, either by a more productive husbandry, or by 
cheaper modes of subsistence. The first of these expedients 
tends to keep down the price of raw produce compared with 
labour; the last to raise it; but both of them contribute to 
increased rents, because both enable the landlord to command 
more labour from the produce of the same land. ** 

He concludes that differences in qualities of soils have 
no agency in producing rent, that rent arises "from the 
greater amount of labour which the products of the 
same portion of soil can command, in consequence of 

^Ib., 98-99. 

^ It would indeed be difficult to determine whether Tucker's work 
should be classed as a theory of prosperity or as a theory of distribu- 
tion. There is a constant shift back and forth between money and com- 
modity-rent and money and commodity-wages. He reasons with these 
unlike terms in the same sentence oftentimes as if they were one. His 
book begins with a brilliant exposition of subjective value ; but often 
he shifts value on to a labor-cost basis, then from a labor-cost theory of 
value on to a subsistence basis. He varies back and forth from labor as a 
cause to labor as a measure of value. Again he enters into the realm 
of entrepreneur of money-outlay costs without detecting the change. Yet 
to Tucker a cost is a cost, and a like conclusion must follow. 

^ Tucker, Wages, Profits, and Rent, 99. 



GEORGE TUCKER 99 

the increase of population," that the greater the supply 
of fertile soil the greater is the amount of rent. *^ 

This reasoning is clearly in accord with the thesis 
of Malthus' Essay, which is that abundance and the 
growth of population relative to that abundance is the 
explanation of the progress of rent. *® Indeed a com- 
parison of the views of Malthus on rent with those of 
Tucker, makes it clear that Tucker was profoundly in- 
fluenced by the writings of Malthus. Malthus lays down 
three causes of rent, *^ and emphasizes the first two 
quite to the exclusion of the third. It is significant that 
Ricardo bases his rent doctrine on the third cause given 
by Malthus and practically excludes the first two, while 
Tucker bases his doctrine on the first two and usually 
excludes the third. 

"It thus appears," said Tucker, "that cultivated land 
yields a rent from two causes, and only two : first, from 
the capacity of the earth to return a greater amount of 
raw produce than is expended in its cultivation; and 
secondly, from the increasing demand for this excess 
by the increase of population, so that more labour will 
be given in exchange for raw produce than it has cost 
to produce it." *® 

While Malthus regards differences in fertility of land 
as significant, Tucker, more logically, regards variations 
in the soil as of no theoretical Importance. But Malthus'' 
main thesis is Tucker's main thesis : the capacity of 
the earth to produce a surplus though at a diminishing 

«/&., 100-101. 

** Malthus' Nature and Progress of Rent, 19, 23. 

■" "First, and mainly, that quality of the earth, by which it can be- 
made to yield a greater portion of the necessaries of life than is re- 
quired for the maintenance of the persons employed on the land. Secondly, 
that quality peculiar to the necessaries of life of being able to create- 
their own demand, or to raise up a number of demanders in proportion- 
to the quantity of necessaries produced. And thirdly, the comparative 
scarcity of the most fertile land. lb., 15. 

* Tucker, Wages, Profits, and Bent. ^ 



lOO THE RICARDIAN RENT THEORY 

rate and the growth of population relative to this surplus, 
produce the twofold effect of lowering wages and of 
forcing up the value of this surplus. Both center atten- 
tion upon the relationship between the value of labor 
and the value of raw produce. Tucker's law of substi- 
tution that enables the land to feed more people is a 
variation of Malthus' bounty-of -nature argument. Ex- 
ceptions in both writers are numerous ; but, despite these, 
both saw the value of raw produce to be regulated by 
the law of supply and demand rather than by cost. Both 
emphasized labor as a measure rather than as a cause 
of value. 

In contradiction to Ricardo's teaching, Tucker was 
of the opinion that whatever increases the quantity of 
raw produce lowers the price of it and raises rent. 
Whether it be fertility, favorable seasons, improved 
modes of husbandry, manures, or more skillful modes 
of cultivation, the effect must be a tendency to lower 
the price of raw produce. But it would not follow 
from this that rents must decline. Lowering of price 
does not diminish rent, because the elasticity of con- 
sumption, even with the same population, will not allow 
prices to fall to the extent that raw produce would 
rise in amount. The supply of precious metals was, he 
states, increased ten-fold after the discovery of America, 
but the value of a given unit of the precious metals was 
lowered not over one-third. *® Tucker's idea of the 
elasticity of consumption has quite superseded Ricardo's 
dictum that man's desires are limited by the narrow 
capacity of the human stomach. 

To summarize here some of the chief arguments so 
far reviewed may prove helpful. He has taught that 
value is subjective or individualistic. Though it cannot 

«/b., 102-103. 



GEORGE TUCKER lOi 

be measured or expressed by objective goods, yet it can 
be approximately expressed in relation to goods in the 
open market where, through mutual competition, the 
estimates of individuals tend to conform to common 
standards. The fundamental law determining value is 
that of supply and demand. But commodities, other 
than those produced by nature, find their supply-limita- 
tion determined by their labor-cost ; therefore value 
tends to conform to, but is not the result of, labor-cost. 
Self-love, seeking gratification, leads to demand and 
supply through which price is fixed. 

Applying this reasoning to the population-rent prob- 
lem, he finds that on the demand side are to be con- 
sidered: (a) the law of population, (b) the elasticity 
of demands, and (c) the forces of distribution. These 
considerations are disposed of as follows : the rate of 
the increase of population varies inversely as its density ; 
demands accommodate themselves to the supply, increas- 
ing with the augmentation of wealth and diminishing 
with the diminution of wealth; the forces of distribu- 
tion operate to the advantage of the landlord who en- 
joys a monopoly return, and give advantage to the cap- 
italist over the laborer who in case of pressure must 
abate in wages or starve. 

On the supply side are to be considered: (a) forces 
limiting the supply of products, and (b) the kind of 
product. Forces limiting product are : climate, fertility, 
kind of seed, skill, method, improvements, secret meth- 
ods, desire for present over future consumption which 
limits the supply of present capital, and the law of dimin- 
ishing returns. The kind of product involves such con- 
siderations as whether beef or potatoes are to be pro- 
duced. 

Rent is considered in two ways : as a payment by 



102 THE RICARDIAN RENT THEORY 

one person to another, and as a commodity return. It 
arises out of the bounti fulness of nature, together with 
an augmenting population. Increased production tends 
to lower the price of raw produce, but, because of the 
elasticity of demands, prices do not fall to the extent 
that production is augmented; therefore an increase of 
commodity-rents means an increase of total value-rents. 
Exchange- value is measured by labor-cost; therefore a 
rise in value-rents is equivalent to a fall in real wages. 
We will now turn to Tucker's criticism of Ricardo's 
theory of rent. After stating Ricardo's theory, he of- 
fered three objections to it : first, the diversity of soil 
has no agency in creating rent; second, the rise of raw 
produce is the cause rather than the consequence of 
the resort to inferior soils ; third, a rise in raw produce 
means a fall in real wages. ^° The third objection has 
already been discussed. 

On the first, he reasons that the result of an increase 
of raw produce is a multiplication of laborers, and grow- 
ing numbers produce competition that lowers wages rela- 
tive to raw produce. It follows that, through time, raw 
produce comes to have greater purchasing power in gen- 
eral. Natural forces tend to augment the landlord's 
purchasing pov/er irrespective of a difference in soil. 
In his second objection to Ricardo (the rise of raw 

^ lb., 108. Not only does Tucker's argument overlook the growing 
demand of labor in this course of development, but also he makes raw 
produce both the supply and the demand. That is to say, while raw 
produce is itself the supply, it is also that which determines the number 
of people who are to demand it. Man's free agency is subordinated to 
natural forces. But, says he, supply and demand produce value, and 
value in turn causes more production. This makes causes beget causes, 
and converts man into a kind of irrational being whose course is deter- 
mined by the fertility of the soil as truly as is the course of a leaf deter- 
mined by the direction of the stream upon which the forces of nature 
have caused it to fall. 

This same conclusion must follow the reasoning of Malthus, and in a 
slightly different waj% the powers of nature are steering Ricardo's helpless 
economic man to the minimum-of-subsistence margin. The laws of natural 
science and the doctrine of the Physiocrats had a hold too firm upon the 
scientific mind of that time to permit the laws of moral pliilosophy to 
hold their true place in the development of science. 



GEORGE TUCKER 103 

produce is the cause rather than the consequence of the 
resort to inferior soils), Tucker said, "It is justly re- 
marked by Ricardo that 'corn is not high because a 
rent is paid, but a rent is paid because corn is high' ; 
but it is equally true that corn is high, not as he sup- 
poses, because 'more labour is employed in the produc- 
tion of the last portion obtained,' but more labour is thus 
employed because corn is high." °^ 

His reasons for the rise of raw produce are two : 
the increased demand, and the greater amount of labor 
for which produce will exchange. But the second rea- 
son is precisely what Tucker elsewhere calls the high 
price itself. 

"Without doubt," said Tucker, "... successive 
resorts to inferior soils, or outlays of fresh capital on 
old lands keep pace with the rise of raw produce; they 
ordinarily afford a measure of the progress of rent, 
but they are no more the cause of its rise, than 
the weights on one scale cause the gravity of the body 
in the opposite scale, though they may correctly inform 
us of its amount." ^' 

In this regard, his thought so strictly conforms to 
Senior's encyclopedic article, to which Tucker makes 
reference, ^^ that there is reason to suspect an influence 
by Senior over him. Senior wrote, "And yet it is clear 
that if we suppose the existence of a populous and 
opulent district of great but uniform fertility, giving a 
large return to a given expenditure of capital, but incap- 
able of giving any return whatever on a less expenditure, 
or any greater return on a larger expenditure, such a 
district would afford a high rent though every rood of 

»/b., 111-112. 

62 Tucker, lb., 133. 
»76., 122. 



104 



THE RICARDIAN RENT THEORY 



land and every portion of the capital applied to it would 
be equally productive." ^'* 

As for diminishing returns, we have seen that 
Ricardo's concept could serve only for static condi- 
tions. Malthus had the concept of historical diminish- 
ing returns, or of a process of transition from one 
static state of returns to society as a whole to another 
such static state. But to him the dynamics of different 
factors were unequal, and the consequent disproportion- 
ality meant a minimum of subsistence. Tucker's con- 
cept is Malthus' concept improved. Tucker makes far 
more allowance for improvements in husbandry, and 
emphasized over and over the idea of consumption being 
modified or changed to meet the new circumstances. 

Credit is due Tucker for being the first, apparently, 
to make use of the law of limited returns. ^^ It is diffi- 
cult to pick out a single quotation from Tucker either 
to prove that he adequately presented this law, or to 
give a clear idea of his conception. The idea runs 
throughout the work and at no place finds precise state- 
ment or definition. Tucker often assumes fundamental 
principles as commonplace, and fails to give them formal 
expression. 

At one place, he said : 

There are millions of acres, on our large rivers, and in 
the western country, which at a small additional expense, would 
produce their maximum, or so near it that no further outlay 
of capital could increase their product ten per cent. But what- 
ever might be the effect of these expedients, it is clear that 
they have their limits, and that, if the population went on 
increasing, the time must come when there could be no further 
conversion of other lands into arable, and when the arts of 
husbandry would admit of no material improvement. In that 

^Ib., 122. 

^ Professor Patten overlooks Tucker when he considers that his (Pat- 
ten's) Premises of Political Economy (1885) contained the first presenta- 
tion of this law. 



GEORGE TUCKER 



105 



case, the further demand of increasing numbers could be met 
only by an alteration either in the quantity or quality of an 
individual's subsistence. ^® ... It may be remarked, by 
the way, that the political economists of the Ricardo school 
seem to assume that upon all lands successive portions of capital 
can be expended so as, in a diminishing ratio, to increase the 
amount of its produce. But this is true onlj^ with the inferior 
soils, and not even with them to the extent supposed. ^'^ 

The reason he makes a partial exception for inferior 
soils is that such soils, as other parts of the book indi- 
cate, give a larger proportional return to manure and 
other soil-improvements, and that the duration of the 
period until it reaches the point of maximum returns is 
longer. 

Professor Patten gives a clear expression of the idea : 

All writers, in discussing the law of diminishing productive- 
ness of the soil, have accepted, without dispute, the assumption 
that the return for labor from a given tract of land could be 
continually increased by the use of more labor, the point con- 
troverted having been whether or not the additional labor con- 
tained a greater or less proportional return than the previous 
labor. Both parties seem to have overlooked the third alterna- 
tive, that the proportional return might increase up to a point 
beyond which no additional return could be obtained by any 
amount of labor. If this were true, we would have a law of 
limited returns as contrasted with a law of diminishing re- 
turns. ^^ 

This means that, beyond a certain point, additional 
numbers cannot be provided for at all.. Both the culti- 
vation of poorer soils and the higher prices of food are 
accounted for by the law of limited as well as by that 
of diminishing returns. That superior lands cannot sup- 
ply the market has been thought to demonstrate the fact 
of a limit to the productive power of land. ^® 

Tucker and later writers in discussing this concept, 

^Tucker, Wages, Profits, and Rent, 116-117. 

^ lb., 117, note. 

•* Patten, Premises of Political Economy, 152. ^ /&., 152-153. 



lo6 THE RICARDIAN RENT THEORY 

have in mind commodity-returns only. This fact, in 
my judgment, renders the concept one impossible of any 
practical application, because production would cease 
when cost came to equal value-returns. This point, as 
both reason and experience show, must be reached long 
before an actual physical limit to returns is attained. 
Cultivation would be arrested even when population be- 
comes most dense, because of the principle of propor- 
tionality. Cultivation will cease at the point where cost 
equals value-return and not at the point of maximum 
physical return. 

This concept is necessarily static. It could be true 
only under given conditions. Under a condition, for 
instance, where horses are used for plowing, one team 
of horses can get the maximum return from a given 
plow within a given time; under another condition, 
where steam is used, one engine could get a larger max- 
imum return from this plow. At each time, the maxi- 
mum return is produced; but the returns are different 
at the two times to the extent that the engine is swifter 
than the team. The productive capacity or supply of 
any factor is always limited by the conditions and com- 
bination of forces of which it is a part. The same 
reasoning applies to different stages of agriculture, and 
to different stages of progress. 

This concept must also be considered in relation to 
the prevailing habits of consumption, since consumption 
determines the nature of demands, and demands, in turn, 
determine what commodities must be produced. The 
cost outlay required to reach limited returns would vary 
with the classes of commodities that are to be produced. 
Land cultivated to a point of limited returns for superior 
food (e.g., beef) would support few as compared with 
the same tract used for less costly food (e.g., potatoes). 



GEORGE TUCKER 107 

A dynamic theory of consumption teaches that, as popu- 
lation advances, consumption requires a greater variety 
and a superior quahty of goods. Now, in a more ad- 
vanced state of civilization, the earth could support more 
people to the extent that consumption is varied, since a 
greater variety of margins with limited returns could 
be attained. But, to the extent that superior quality 
is demanded, the earth could support fewer people be- 
cause no limited-returns margin could yield as much food 
of a superior as of an inferior quality. Turning now 
to Tucker's concept of consumption, which, as popula- 
tion grows more dense, tends toward a less variety and 
a cheaper, coarser quality of food, we find that opposite 
reasoning would apply. 

It is debatable under which of these forms of con- 
sumption the earth could support the greater number of 
people. But certainly the greatest number could be 
supported under a form of consumption which combines 
the qualities of greatest variety, thus making available 
various grades of land, and the cheapest quality which 
would enable each variety of land to yield the maximum 
nutriment. 

The application of this principle to all classes of pro- 
ductive agents can be easily made, but is beyond our 
present task. The nature of consumption, which in- 
cludes the standard of tastes must reckon with the kind 
as well as the variety of consumable goods ; then the 
nature of consumption is but one end of the stick of 
which the coordination of productive factors to supply 
that consumption is the other. 

Though recent writers have made much of this law 
of limited returns, is there anything in it except a modi- 
fied statement of diminishing returns? It simply places 
a limit at which, if ever reached, diminishing returns 



io8 THE RICARDIAN RENT THEORY 

would become stationary returns. Everything the con- 
cept could embrace is embodied in the law of propor- 
tionality, and the ultimate limit of returns is, as I have 
indicated, at the point of maximum value-returns and 
not at the point of maximum physical returns. To ad- 
here to the idea of physically limited returns is to shift 
from an economic to a physical basis of reasoning. 

In this chapter, we have found that George Tucker 
was a scholar and statesman whose thought upon eco- 
nomic questions was in many respects far in advance 
of his time. His subjective theory of value is essentially 
the same as that held by leading thinkers of the modern 
psychological school. Regarding value as an individual 
estimate, he reasoned that the market price of a good 
need not necessarily correspond with the value which 
either purchaser or seller attaches to it. But he rea- 
soned that, in the process of purchases and sales, the 
traders come to think in common terms and to adjust 
their thought more or less to a common basis. In keep- 
ing with the subjective theory of value, he finds that 
population is regulated by volitional control, and that 
volitional control so works that numbers increase in- 
versely as the density of population. He classifies land 
as capital at times, and teaches that land-rent and profits 
obey the same laws. He regards rent as a surplus, and 
brings out the concept of quasi-rents. In every case, he 
regards rent as well as profits a deduction from the law 
of diminishing returns; he looks upon variations in the 
soil as of no theoretical importance. Malthus and Tucker 
used the same bases in their rent problem. But in fair- 
ness to Tucker it may be said that he advanced the 
problem much farther than where Malthus had left it. 
I should classify Tucker as one of the ablest American 



GEORGE TUCKER 109 

economists under review if not one o£ the ablest thinkers 
on the subject that this country has ever produced. The 
next chapter, devoted to Henry C. Carey, will point out 
specifically and in detail the differences in the prevailing 
points of view in the United States and in England. 



CHAPTER VI 
HENRY CHARLES CAREY 

THE environment, early career, and personal 
characteristics of Carey (1793-1879) decided- 
ly influenced his thought. It is necessary, 
therefore, briefly to review these influences. Carey's 
voluminous writings began in 1835, and continued to 
appear throughout a period of unprecedented industrial 
development. The population increased 32.7 per cent 
from 1830 to 1840, and 35.9 per cent during the next 
decade. The wealth per capita in i860 was more than 
double that of 1840. The growth of factories and indus- 
tries, of inventions and skill, compose an amazing chap- 
ter in material civilization. During the two decades 
after 1830, the railroad mileage grew from 29 to 9,021 
miles. Philadelphia, the home of Carey and most of 
his followers, was the railroad center. Though spread 
over a vast area, the population of the country main- 
tained political continuity while it was incorporating vast 
bodies of immigrants. Under a new and liberal form 
of government, a growth of national feeling was mani- 
fest. The extension of transportation facilities was 
uniting diverse interests into common interests, was 
bringing the farm into touch with the manufacturing 
cities, and was emphasizing that unity of national inter- 
ests which formed so clear a basis for the "principle of 
association," which was the fundamental tenet of the 
Carey School. 

Good prices and home markets gave encouragement 
to agriculture, while the growth of skill, capital, and 
superior equipment made possible the utilization of the 



HENRY CHARLES CAREY m 

more fertile lowlands where resistance to cultivation was 
greatest. Observation of these facts led Carey to deny 
the Ricardian order of cultivation. The land was owned 
for the most part by the great middle class in the form 
of average-sized farms. In America, the title landlord 
was no mark of distinction. There was no distinct city 
class as opposed to an agricultural class. Americans 
had inherited no association of ideas from the Middle 
Ages which would lead to an artificial differentiation 
between natural agents and other forms of wealth; and 
no inherited fixity of relation existed between the land- 
lord and the serf. Land, like other forms of capital, 
was subject to frequent purchase and sale. Frontier 
lands were almost free; consequently the value of a 
cultivated farm was hardly more than the cost of its 
improvement. These facts caused Carey to believe that 
the value of land was determined by its cost of repro- 
duction. The law of diminishing returns in agriculture, 
though never denied, had found no serious consideration 
at the hands of any American economist previous to 
Carey. Very naturally, the majority of American econ- 
omists spoke of land as capital, and the Carey School 
wrote much in defense of this idea. 

In the midst of dynamic progression, the population 
was versatile and optimistic. N. W. Senior said of this 
country: "They have afforded a field in which the 
powers of population have been allowed to exhaust their 
energy; but though exerted to their utmost they have 
not equalled the progress of subsistence. Whole col- 
onies of the first settlers perished from absolute want; 
their successors struggled long against hardship and pri- 
vation ; but every increase of their numbers seems to 
have been accompanied or preceded by increased means 
of support." ^ Alfred Marshall says : 

* Senior, N. W., Two Lectures on Population, 49. 



112 THE RICARDIAN RENT THEORY 

"The Englishman Mill bursts into unwonted enthusi- 
asm when speaking of the pleasure of wandering alone 
in beautiful scenery; and many American writers give 
fervid descriptions of the growing richness of human 
life as the backwoodsman finds neighbours settling 
around him, as the backwoods settlement develops into 
a village, the village into a town, and the town into a 
vast city." - 

There was not a time between 1830 and i860 when 
an increase of population would not have been desirable. 
We are not surprised to learn that Malthusianism was 
unpopular, and that a growth of numbers was regarded 
as an indication of prosperity. With such conditions, 
it was natural that progress should be considered the 
normal law of economic life; and that a dynamic law 
of increasing returns should be developed by our econ- 
omists rather than a law of diminishing returns. Na- 
tional growth together with a vigorous optimism tended 
to reverse the tenets of the Maltho-Ricardian School. 
Carey's optimistic philosophy was born under favorable 
auspices. This was a period of partial reaction in Eng- 
land; a juncture when the deductions from a few as- 
sumed premises seemed hardly adjustable to the condi- 
tions of actual life. 

From his ninth year, Carey was associated with his 
father in the business of publishing and selling books. 
The firm "Carey and Lea," of which H. C. Carey became 
a partner in 1814, was the leading publishing house in 
America. He read most of the works sent in for pub- 
lication and republication. In this way, he secured his 
education. His assiduous labors and good memory soon 
made him the best equipped economist in the United 
States. ^ 

*= Marshall, A., Principles, 321 n. 

3 Elder, Wm., Memoir of H. O. Carey, 32. Livermore, C. H., Polit. Sci. 



HENRY CHARLES CAREY 113 

"Thirteen octavo volumes and three thousand pages 
of pamphlets remain as the fruit of his activity, besides 
an amount of matter, supposed to be twice as great, con- 
tributed by him to the newspaper press. Of his more 
important works, there are translations in French, Ital- 
ian, Portuguese, German, Swedish, Russian, Magyar, 
and Japanese." * Practically the whole of his philosophy, 
however, may be found in his Principles of Social 
Science. 

At the age of forty-two, there occurred two important 
events in his history: (i) he retired from business with 
a considerable fortune, and (2) he published his famous 
Essay on the Rate of Wages. ^ The immediate cause of 
this essay was his reading the lectures by Senior on The 
Cost of Obtaining Money and The Rate of Wages. With 
Senior, he held to the wage-fund doctrine ; but, contrary 
to Senior, he emphasized "real wages" rather than 
"money-wages." 

It is interesting to note that, in his first essay, he advo- 
cated many of the classical theories. He held to the 
wage-fund doctrine, and advocated free trade; yet there 
are embodied in this essay many of the teachings which 
compose his later system of thought. 

Carey was unsympathetic with an opponent. His 
iterations were vigorous. In Elder's Memoir we find 
statements indicating that his economy took something 
of the tone and temper of national prejudice. "His 
father, Mathew Carey, was an Irish patriot, a political 
exile from the land of his birth. Something hereditary 
may be detected running, with much of the pristine 
force of blood, through the life and character of the 

Qr., V, 553. Thompson, R. E., Article "Carey" in Stoddard's Amer. sup. 
to Ency. Brit. 

* Dunbar, C. F., article "Carey" in Palgrave's Dictionary. 

" Elder, Wm., Memoir, 37. 
Livermore, C. H., op. cit., 554. 



114 



THE RICARDIAN RENT THEORY 



son." ® "He sometimes clinched his dehverances with 
expletives and epithets something out of fashion in 
society." ^ An English traveler speaking of Mr. Carey 
to T. E. Leslie said, "He is a man of plain speech, and 
swears like a bargeman whenever Mill's name is men- 
tioned." ^ Professor A. L. Perry states that "he [Carey] 
hated England with all the fervor of a Celt" and further 
that "a temperament and a prejudice like this is hardly 
favorable to processes of logical reasoning." ^ Leslie 
shares this opinion in some degree. ^° 

But these comments should not be taken too seriously. 
It is difficult to believe that a man with Carey's superior 
intellect should personally hate all Englishmen. He was 
much indebted to English thinkers, among others Spen- 
cer and Senior; and his mention of some Englishmen 
is most complimentary. Desire to find the truth seems 
to be his one motive. Let an unfavorable doctrine come 
in his way, however, and he remonstrated with a Spar- 
tan-like vigor. That he was positive in his convictions, 
dogmatic, wanting in judicial temperament, over-confi- 
dent, and too much one-sided on many questions, cannot 
be denied. He was ultra optimistic ; and, to all the griefs 
and trials of man, he was blinded by his beautiful prin- 
ciple of association. He was honest, profoundly in 
earnest, and labored with zeal for the betterment of 
man. 

Men of this type compel reactions. They are admired 
or disliked, as the case may be, always in the superlative. 
R. E. Thompson thought that the philosophy presented 
by Carey "vindicates the ways of God to man," ^^ and 

*" Elder, Wm., Memoir, 31. 
''lb., 34. 

* Leslie, T. E., Political Economy in the United States, Fortnightly 
Review, 1880, XXXIV, 502, n. 2. 

^ Perry, A. L., Political Economy, 82, 83. 

10 Leslie, T. E., op. cit., 501. 

^ Social Science and National Economy, 30. 



HENRY CHARLES CAREY 115 

Dr. Elder thought that Carey's Past, Present, and Fu- 
ture marked "an era in the history of poHtical economy, 
from which it may count its A. U. C, its Hegira, or 
its Declaration of Independence." ^- "On the other 
hand," says Livermore, "the college professors arose 
from the perusal of Wayland's Political Economy and 
jeered at the unbeliever. Were Ricardo, Malthus, Mc- 
Culloch, and Mill blind leaders of the blind? If they 
were, was it out of New Jersey that a prophet should 
arise with the sovereign balsam of feeble eyesight? 
[Carey then lived in New Jersey.] And with one accord, 
they all cried the louder: 'Great is laissez faire of the 
Ricardians.' " 

Mr. Livermore's statement is very apt, for Carey has 
had a small following among college professors. But in 
newspapers, politics, and campaign literature, possibly 
few men for fully a half century were quoted more on 
the tariff. His following among publicists has been 
large. He was an adviser to President Lincoln and to 
Secretary Chase. ^^ 

Carey's extremely optimistic temperament was one 
reason for his opposition to Malthus and Ricardo. Dif- 
ferences of opinion often find their origin in differences 
of temperament. The scientist, as such, reaches conclu- 
sions only through impersonal reasoning. Man, as such, 
too often has his conclusions biased by his own tempera- 
ment. The difficulty is that the scientist and the man 
are inseparable. There being two sides to most ques- 
tions, there is opportunity for the human element to 
load the evidence in favor of this contention or that. 
Ricardo was pessimistic ; Carey was optimistic. Ricardo 
loaded the evidence from the English conditions of 1815 ; 

'^Memoir, 26. 

1* Livermore, op. cit., 571. 



Ii6 THE RICARDIAN RENT THEORY 

Carey loaded the evidence from the American conditions 
of 1848. ^^ 

The purpose of this chapter is to present briefly 
Carey's theory of rent and to contrast his views with 
those of Ricardo especially as to the law of diminish- 
ing returns. We shall find that, contrary to the general 
opinion, Carey never denied the theory of diminishing 
returns in the sense that Ricardo taught it. 

In order to follow Carey's criticism of Ricardian rent, 
I shall briefly review Carey's arguments on population. 
Carey overlooked the social phenomena that followed the 
Second Hundred Years' War between England and 
France. He maintained that the origin of the theory 
of population that Ricardo had in mind, Malthusianism, 
was to be found in the commercial policy of England. ^^ 
Following in the lead of the American economists, ^* 
Rae, " Wayland, ^^ Vethake,^^ Cardozo, -° and Phillips,^! 
and of Senior ^^ in England, Mr. Carey argues at length 
to prove that Malthus' geometrical and arithmetrical 
ratios are impossible. -^ God in his all-goodness, reasons 
Carey, provides for man. He admits that men perish. 
This, however, is not due to the niggardliness of nature, 
but to the insufficiency of men. ^* 

Chemistry teaches, he argues, that a dense population 

1* Franklin, A Select Collection of Scarce and Valuable Economical 
Tracts, 215. Smith, Adam, Wealth of Nations, I, 72. Everett, A. H., 
New Idea^ on Population, Chaps. 2-3. Senior, N. W., Two Lectures on 
Population, 49. Marshall, A., Principles, 321-322, note. 

^5 Carey, Principles of Social Science, I, 464. 

^8 It would be better to say, in keeping with American thought. 

I'^Rae, John, The Sociological Theory of Capital (N. T., 1905), 392. 

1* Wayland, F., Elements of Political Economy (Boston, 1859), 302. 

i*Vethake, Henry, The Principles of Political Economy (Philadelphia, 
1838), 116. 

"0 Cardozo, J. N., Notes on Political Economy (Charleston, S. C, 1826), 
35-36. 

21 Phillips, Willard, A Manual of Political Economy (Boston, 1828), 

''^ Senior, N. W., Two Lectures on Population (London, 1831), Lee. II, 
46-52. 

^Social Science, III, 267, and 349-350. 
2*/&., 350. 



HENRY CHARLES CAREY 117 

is necessary for the well-being of man. ^^ Space will not 
permit a full presentation of his arguments under this 
head of his discussion. Because of the increase in pop- 
ulation, the growth of association, capital, and skill, 
which result, will cause the land to yield more food; 
and by reason of a law of substitution which accom- 
panies the advancement of civilization, man comes to 
have less need for the products of the land. Man be- 
comes more and more dependent on plant life. Plants, 
on their side, must have carbonic acid gas, which is 
furnished them by the breath of animals. A dense pop- 
ulation will supply the needed animal breath, and ani- 
mals, a discordant element in his principle of associa- 
tion, will gradually disappear. Thus, man producing 
the carbonic acid gas and plants the oxygen, give us 
an example of that "perfect" economic harmony which 
runs through his writings. 

Carey's last and most important argument is that 
man's cerebral and reproductive functions become antag- 
onistic through development. Population is self-regula- 
tive. The power to maintain individual life and the 
power to propagate the species must vary inversely if 
over-population be avoided. If a race continues to exist, 
the forces destructive of it and the forces preservative 
of it must tend toward equilibrium. -^ 

In this argument, we find Carey's ultimate check to 
over-population. To read only his first three argu- 
ments, one concludes that Carey had in mind no con- 
ceivable limit to the propagation of man. Economic 
historians have, for the most part, overlooked his claim 
that population is self-regulative. Professor Roscher, 
for example, maintained that Carey had in mind no 

25 ib., 319-320. Of. ib., II, 269; III, 315, 318, 325, 327. 
*8 0p. cit.. Ill, 46. 



Il8 THE RICARDIAN RENT THEORY 

check to over-population and cited Carey's Past, Present, 
and Future and Principles of Social Science to substan- 
tiate his contention. -^ It is true that when, in 1848, he 
wrote his Past, Present, and Future, he had not devel- 
oped the argument, and frankly stated that "the time 
may arrive when the world will be so fully occupied 
that there will not be even standing room." ^® But be- 
tween 1848 and 1858-59, the date when he brought out 
his Principles of Social Science, appeared Herbert Spen- 
cer's famous article on populations^ (1852), which sup- 
plied Mr. Carey with an ultimate check to over-popula- 
tion, thus rounding out his theory. ^° Carey's argument 
is that there is no minimum-of -subsistence margin, nor 
any over-population problem. ^^ 

Having mentioned his arguments on population, as 
well as the industrial and personal conditions that in- 
fluenced them, I shall follow his approach to the rent 
problem a little farther by briefly presenting certain con- 
cepts that are of the substance of the problem itself. 

Carey, as we shall see, regards land as a form of 
capital, and makes rent virtually synonymous with in- 
terest. Rent and interest find their origin in the con- 
flict, so to say, between the power of nature's control 
over man and the power of man's control over nature. 
In proportion to other shares of the distribuendum, rent 
and interest are high when nature's control is stronger, 
and low when man's control is stronger. 

Concepts having to do with man's control over nature 

^ Roscter, Principles of Political Economy (Chicago, 1882), sec. cclxii, 
note 1. 

^Past, Present, and Future (Philadelphia, 1848), 77. 

^ A Theory of Population, deduced from the General Law of Animal 
Fertility, in Westminster Review, April, 1852. 

30 Prin^ciples of Social Science, chap. 46. 

*i Professor Haney says that Carey preceded Spencer in this theory: 
History of Economic Thoii,ght (N. T., 1911), 247. Professor R. E. 
Thompson also makes this mistake: Stoddard's Encycl., Amer. supple- 
ment to Encycl. Brit., I, 722. 



HENRY CHARLES CAREY 119 

are wealth, utility, and capital. "Wealth consists in the 
power to command the always gratuitous services of 
nature." ^- "Wealth grows with the growth of man's 
power over nature. The more that growth, the more 
feeble becomes nature's resistance, and the greater is 
the tendency toward acceleration of progress in the fur- 
ther growth of wealth." ^^ "The utility of things is the 
measure of man's power over nature." ^* "Capital is 
the instrument by means of which that mastery is ^ac- 
quired." ^^ In what does capital consist ? Carey says, 
"At one moment in the form of food ; at another, in 
that of physical and mental force ; and, at a third, in 
that of bows, arrows, canoes, ships, lands, houses, fur- 
naces, and mills." ^^ He speaks of "further accumula- 
tion of capital in the form of that higher intelligence." ^'' 
Capital, then, is both objective and subjective. Carey is 
obscure on tfiTs point. He considers interest a payment 
for the use of capital. Land is capital, so it would 
seem that a payment for the use of land would be inter- 
est. Rent, however, is spoken of as a payment for the 
use of land; so rent and interest would be the same — 
interest on land would be rent. Man also is capital. 

^Principles of Social Science, 186. In his Miscellaneous Works, the 
article "Wealth: Of What Does It Consist?" he defines the term thus: 
"Wealth consists of the power to command the services of the always 
gratuitous forces of nature" (5-6). Further, "Of all tests of the growth 
of wealth the most certain is that which is found in the comparative 
power of a people for the production and consumption of iron" (lb., 
10-11). His environment in Philadelpia possibly had something to do 
with his exalt«d opinion of the iron industry and his advocacy of pro- 
tection. The poet Bryant (for more than half a century editor of the 
New York Evening Post) thought Carey's opposition to orthodox economy 
was due to mercenary motives (Carey's Miscellaneous Works; article, 
"Financial Crises: Their Causes and Effects"; Brj'ant quoted 15-16). 
T. E. Leslie thought Carey's economy as much a product of Pennsyl- 
vania as was its iron and coal (Fortnightly Review, 1880, XXXIV, 503). 
Professor Perry was of the same opinion as Leslie (Political Economy, 
18th ed., 83). 

'^^ Miscellaneous Works. Article, "Wealth: Of What Does It Consist?" 
11. 

^* Principles of Social Science, I, 179. 

^Jb., Ill, 50. 

38/6. 

»^ lb. 



120 THE RICARDIAN RENT THEORY 

Why, then, would not wages be interest? Wages and 
interest, however, are regulated by different laws. They 
move up or down in opposite directions. These remarks 
are justified by statements throughout his works and by 
criticisms of him on his confusion of terminology. 

Concepts having to do with nature's control over 
man are value and cost of reproduction. "Value is the 
measure of the resistance to be overcome in obtaining 
those commodities or things required for our purposes 
— of the power of nature over man." ^^ In the same 
chapter, we are told that the idea of value "is simply 
our estimate of the resistance to be overcome, before 
we can enter upon the possession of the thing desired." ^^ 
This chapter contains expressions of which the follow- 
ing are characteristic: "What are the things to which 
he attaches the idea of value?" "He attaches no value 
to the light." "How much is the value he attaches to 
the chair upon which he sits?" etc., etc. 

One of the definitions quoted above is subjective and 
the other objective. The relative values of commodities 
are determined by their labor-cost of reproduction. "In 
exchanging, the most obvious mode is to give labor for 
labor." *° For short, value : value : : labor-cost of repro- 
duction : labor-cost of reproduction. *^ 

His greatest confusion comes from attributing value 
to man. Of the utility of man he says, "The greater 
that utility, the higher is his own value, and the less 
that of the things he needs. The cost of reproduction 
steadily declining, he himself as steadily rises, every 

^Principles of Social Science, 1, 158. 

39 /b., 148. 

^Ib., 151. 

^"^ Marshall makes Carey's value a money-cost-of -reproduction concept. 
Carey himself, on the value of a good, spoke of the human effort re- 
quired for its reproduction (Cf. Marshall, op. cit., 401, Carey, Principles 
of Social Science, I, 151). Marshall says normal cost of reproduction and 
normal cost of production are convertible terms {lb., 401). 



HENRY CHARLES CAREY I2i 

reduction in the value of existing capital being so much 
added to the value of the man." *- "The value of man, 
like that of all other commodities and things, is meas- 
ured by the cost of reproduction, and not by that of 
production." *^ 

These statements are not in harmony with value as 
nature's control over man. They indicate that value is 
man's power over nature. How does this differ from 
wealth, man's power over nature? How does the idea 
that "a greater utility in man means a higher value in 
man" harmonize with "the two [value and utility] ** 
thus move in opposite directions, and are always found 
existing in the inverse ratio of each other" ? *^ Incon- 
sistencies such as these confuse the argument. Yet the 
general relationship seems to be that value is nature's 
power over man and that it is limited by cost of repro- 
duction. Wealth is man's power over nature, utility is 
the measure of this power, and capital consists in the 
means or instruments which give this power. *^ 

Since rent is a payment for the use of land, it is pro- 
portionately high or low as the value of the land is high 
or low. This leads us to the rent problem. 

On rent, *^ he presents two arguments: (a) Land is 
capital; rents grow proportionately less; (b) The natural 
order of cultivation is from poor land to rich. 

First. Land is capital. The clay through which the 
farmer guides his plow is subject to exactly the same 
law as when it has passed through the potter's hands 

^Principles of Social Science, III, 111. 

«/6., 130. 

" Parenthesis mine. 

4^ Principles of Social Science, I, 179. 

••* Roscher, Principles of Political Economy, I, sec. 5, note 4. 

'"Principles of Social Science, I, v. Speaking of his work of 1837, 
Carey said of himself, "He had already satisfied himself, that the theory 
presented for consideration by Mr. Ricardo, not being universally true, 
had no claim to be so considered ; but it was not until ten years later 
that he was led to remark the fact that it was universally false." 



122 THE RICARDIAN RENT THEORY 

and has been converted into china and earthenware. It 
is a universal law that governs matter. *^ 

"If we can show that the land heretofore appropriated 
is not only not worth as much labor as it has cost to 
produce it in its present condition, but that it could not 
be reproduced by the labor that its present value would 
purchase, it would be obvious to the reader that its 
whole value is due to that which has been applied to 
its improvement."*^ Again, "There is not, throughout 
the United States, a county, township, town, or city, 
that would sell for cost; or one whose rents are equal 
to the interest upon the labor and capital expended." ^^ 
Quotations and arguments from his works might extend 
over pages, all to the effect that capital in land differs 
in no respect from that invested in machines. In fact. 
President Walker remarks that, "The trouble with Mr. 
Carey's argument is its super-abundance of proof." " 

In other words, before appropriation, land is a free 
good, like air and water. Its value is due to the labor 
employed in its appropriation and improvement. ^^ "Im- 
provements" is broad enough to include roads, canals, 
churches, and the like. ^^ Land being capital, rent is 
only a form of interest. As progress, invention, and 
skill advance, the cost of reproduction declines. There- 
fore rents proportionately decline; proportionately, of 
course, to the products of the land. ^* 

^Principles of Social Science, I, 164. 

^ Principles of Political Economy, I, 102. 

^ Past, Present, and Future, 60 ; almost the same wording in Principles 
of Social Science, I, 168. 

!si Walker, F. A., La7id and its Rent, 77. 

^2 Principles of Political Economy, I, 129, 130. 

^Principles of Social Science, I, 168. 

^ Doubtless J. S. Mill and F. A. Walker are the strongest, at least 
among the strongest, critics of Carey's cost-of-reproduction concept. Mill 
omits cost of reproduction in his criticism of the point. Take this from 
his argument, and Carey himself would not recognize it. J. S. Mill, 
Principles of Political Ecori'Omy (Ashley ed., London and New York, 
1909), 430-432. See MacLeod, The History of Economics, London 
(1896), 590-592, on self-contradiction of Mill on rent. Walker makes 
the stronger criticism (Land and Its Rent, 75-88). In a later work 



HENRY CHARLES CAREY 



.123 



Second. The natural order of cultivation is from poor 
to rich soils, from the dry, sandy soil of the hillside 
to the rich lands of the valley. Since this argument is 
aimed at Ricardo, we will give it as follows : ( i ) Incon- 
sistencies of Ricardo. (2) Why Ricardian rent is gen- 
erally accepted. (3) It depends on a single supposition. 
(4) Statement of Carey's argument. (5) Deduction: 
rent proportionately declines. 

After an introduction replete with irony as to Ricar- 
do's "great discovery," he turns to the college professors 
and compares them to the followers of Mohamet in 
regard to the Koran. Their insolvable task is to deter- 
mine what it is they are required to believe. Those who 
follow Ricardo are economists par excellence : anything 
short of absolute faith in him is heresy, worthy of ex- 
communication, contemptible. The professor "having 
studied carefully the works of the most eminent of the 
recent writers on the subject, and having found no two 
of them to agree, he turns, in despair, to Ricardo him- 
self, and there he finds, in the celebrated chapter on 
rent, contradictions that cannot be reconciled, and a 
series of complications such as never before, as we 
believe, was found in the same number of lines. The 
more he studies, the more he is puzzled, and the less 
difficulty does he find in accounting for the variety of 
doctrines taught by men who profess to belong to the 
same school, and who all agree, if in little else, in regard- 
ing the new theory of rent as the great discovery of the 
age." ^° 

this author advocates cost of reproduction. He speaks of it as "beyond 
the reach of discussion," {International Bimetallism, 25-29). Professor 
J. W. Jenks expressed the opinion that Carey's theory of a constant 
decline in value, including agricultural products, is that he had in his 
mind's eye the United States where, as a result of free and abundant 
fertile lands, agricultural produce had still a low cost of production 
(Jenks, Henry O. Carey as Nationalokonom, 30, 31). 

^ Past, Present, and Future, 17-18 (quotation from p. 18). 



124 ^^^ RICARDIAN RENT THEORY 

Why, then, is Ricardo's theory generally accepted? 

At first sight, it looks, however, to be exceedingly simple. 
Rent is said to be paid for land of the first quality, yielding 
one hundred quarters in return to a given quantity of labor, 
when it becomes necessary, with the increase of population, 
to cultivate land of the second quality, capable of yielding but 
ninety quarters in return to the same quantity of labor; and 
the amount of rent then paid for No. i is equal to the differ- 
ence between their respective products. No proposition could 
be calculated to command more universal assent. Every man 
who hears it sees around him land that pays rent. He sees 
that that which yields forty bushels to the acre pays more rent 
than that which yields but thirty, and that the difference is 
nearly equal to the difference of product. He becomes at once 
a disciple of Mr. Ricardo, admitting that the reason prices are 
paid for the use of land is that soils are different in their 
qualities, when he would, at the same moment, regard it as 
in the highest degree absurd if any one were to undertake 
to prove that prices are paid for oxen because one ox is heavier 
than another ; that rents are paid for houses because some 
will accommodate twenty persons and others only ten; or that 
all ships command freights because some ships differ from 
others in their capacity. ^^ 

Ricardo's whole theory is based upon a single sup- 
position. After reducing the theory to six brief state- 
ments, he (Carey) says, "It will be perceived that the 
whole system is based upon the assertion of the exist- 
ence of a single fact, viz., that in the commencement of 
cultivation, when population is small, and land conse- 
quently abundant, the soils capable of yielding the largest 
return to any given quantity of labor alone are culti- 
vated. That fact exists or it does not. If it has no 
existence, the system falls to the ground. That it does 
not exist ; that it never has existed in any country what- 
soever; and that it is contrary to the nature of things 
that it should have existed, or can exist, we propose now 
to show." ^'^ 

^Ih., 18, 19. 
^ lb., 23. 



HENRY CHARLES CAREY 125 

So much for Ricardo's single supposition and what 
Carey proposes to show. What is Carey's argument 
on the point? He reverses the Ricardian order of cul- 
tivation. In the first settlement of a new country, 
Ricardo thinks that No. i, the 40-bushels-to-the-acre 
tract, would be first occupied. When population multi- 
plies to the extent that it is necessary to cultivate No. 2, 
then rent begins on No. i — the rent being the difference 
between the two, or 10; and so on. 

In the first settlement of a new country, Carey thinks 
that the poorest tract, say No. 5, will first be occupied; 
and, with the growth of population and wealth, 4, 3, 2, 
and I will successively come into cultivation. Carey'? 
reasons are that the richer lands offer greater resist- 
ance than half -civilized men, or needy colonists, or the 
few new settlers in a virgin land with small capital and 
no organization, can overcome. The most fertile lands 
are covered with dense forests; among the most general 
difficulties are swamps or marshes, bogs, and malaria. 
Through the growth of population, capital, and associa- 
tion, such power over nature is acquired as will make 
possible the utilization of the most fertile soils. ^^ 

From this, it follows that constantly increasing re- 
turns result, and "there is a steady diminution in the 
proportion of the population required for producing the 
means of subsistence, and as steadily an increase in the 
proportion that may apply themselves to producing the 
other comforts, conveniences, and luxuries of life." ^® 

Continuing, we find that, "Rent is paid for the im- 
provements which labor has accomplished for, or on, 
land, and which constitute items of wealth. Wealth 
tends to augment with population, and the power of 

^ lb., cliap. I; also Principles of Social Science, I, chaps. 4, 5. 
^ Past, Present, and Future, 25. 



126 THE RICARDIAN RENT THEORY 

accumulating further wealth increases with constantly 
accelerating pace as new soils are brought into cultiva- 
tion, each yielding in succession a larger return to labor. 
Rent tends, therefore, to increase in amount with the 
growth of wealth and population," ®° etc. But, while 
there is an increase in the amount of rent, it must be 
remembered that rent or the price charged for the use 
of land, like prices of all commodities and things, is but 
compensation for the results of past labor. As cost of 
production becomes less, prices are lowered. Therefore, 
though total rents increase, rent as a share of the pro- 
duce of land decreases proportionately. ®^ 

So much for Carey's arguments on rent and the rela- 
tion of rent to kindred problems. I shall conclude with 
a comparison of these writers, hoping thereby that 
Carey's attitude toward Ricardo may be better under- 
stood. 

Ricardo lived in pessimistic England at the close of 
the Second Hundred Years' War with France; Carey 
lived in optimistic America during her golden age of 
prosperity after 1837. The first wrote in the England 
of 1817; the second wrote in the America of 1848. 
Ricardo was pessimistic — things would have been bet- 
ter if they had not been so bad; Carey was optimistic 
— things will be better because nature is so good. . The 
first accounted for misery through the niggardliness of 
nature; the second accounted for misery through the 
fault of man. Ricardo was a free-trader; Carey was a 
protectionist. The Malthusian law of population and 
the Ricardian theory of rent rest on one and the same 
hypothesis : the limited supply and diminishing product- 
iveness of land in its relation to human fecundity v/ith 

«0 76., 62. 

0^ Principles of Social Science, I, 164. 



HENRY CHARLES CAREY 127 

undiminishing power. Carey's doctrine of population 
and theory of rent are based on the principle of an 
increasing supply of land in its relation to human fecund- 
ity — that fecundity diminishing with the development of 
man. With Ricardo, labor accounts for the value of 
most man-made goods ; with Carey, labor accounts for 
the value of land and other goods. Ricardo's order 
of cultivation was from rich land to poor ; Carey's order 
of cultivation was from poor land to rich; Ricardo's 
rent concept is static : though he taught historical dimin- 
ishing returns, his formula can serve only for measur- 
ing static or unalterable conditions. Carey's rent con- 
cept is dynamic : he looks upon society as progressive, 
multiplying in inventions and skill and increasing its 
returns as it grows. Ricardo regarded land as a dis- 
tinct factor of production; Carey regarded land as cap- 
ital. With Ricardo, rent is a diflferential surplus above 
a no-rent margin ; with Carey, rent is interest on capital 
in the form of land. The first thought that improve- 
ments caused a decrease in total rent ; the second thought 
that improvements caused an increase in total rent. 
Ricardo taught that rent increased while labor received 
less and less on a declining margin ; Carey taught that 
rent proportionately declined while labor received pro- 
portionately more and more on a rising margin. To one, 
increased numbers meant diminishing returns and ris- 
ing rents at the expense of profits and wages ; to the 
other, increased numbers meant increasing returns and 
rising wages at the expense of rents and profits. Both 
were successful business men. Neither was a college 
man. Either ranked as the strongest contemporary econ- 
omist of his nation. After all, the fundamental, the 
one point between Carey and Ricardo, in this connection, 
is diminishing returns. It is true that Carey said "no" 



128 THE RICARDIAN RENT THEORY 

when Ricardo said "y^s"; Carey considered his doctrine 
the direct opposite of that taught by Ricardo. Differ- 
ences in the order of cultivation present no fundamental 
distinction in this question. The philosophy of Ricardian 
rent refers to lands under cultivation at the same time. 
Recent studies justify Carey's contention in many in- 
stances as to the historic order of cultivation. Grant 
the point, yet Ricardo's law of rent is untouched. Not 
historic orders, but lands under cultivation at the same 
time, present the basis for a differential rent-doctrine. 

That Carey said "no" when Ricardo said "yes," is 
taken by critics to be the backward and forward looking 
faces of the same proposition. This, however, is but 
another instance of the common fallacy of mistaking 
different things for the same thing. This I will show 
through a consideration of the essence of the whole 
controversy — diminishing returns. 

Since Carey was not specific on the point, he leaves 
us to interpret his fundamental, possibly his subconscious 
philosophy of this question. In my judgment, there are 
three, and only three, possible interpretations : 

1. There is a declining demand for commodities as 
society approaches a more perfect association, and mean- 
while there are increasing returns from land. In other 
words, while the supply of commodities is constantly 
increasing, our needs are constantly decreasing. 

2. Another interpretation — and that the general one 
— is that Carey denied outright the law of diminishing 
returns as Ricardo used it. 

3. Carey passed by diminishing returns in agricul- 
ture, and reasoned with a land-supply concept in mind. 

Regarding the first of these, Carey, after arguing for 
a tendency to substitute vegetable for animal foods, and 
for increasing powers of augmenting supplies of neces- 



HENRY CHARLES CAREY 129 

sities as man approaches a more perfect state of associa- 
tion, said, "The better his clothing, the less is the waste 
of his body, and the less his need for food." ®- Further, 
*^ "Look, therefore, where we may, we find, throughout 
nature, a constant tendency towards the perfect adapta- 
tion of the earth to the wants of a growing population 
— each and every increase in the power of association 
and combination being accompanied by diminution in 
the quantity of raw material required for the mainte- 
nance of human life, and increase in that which may 
be obtained in return to any given amount of labor." ®* 
Few men have been criticized more severely than 
Carey, yet no one has been so cruel as to accuse him 
of being serious on this point. This does not enter in 
as a part of the body and substance of his philosophy. 
It must be considered alone — isolated from the body it 
is presumed to serve; it is a kind of philosophical comet 
blazing up for the moment, contrary alike to law, order, 
and common sense. Why did Carey compel the farmers 
to move to more fertile soil, if the soil they were on 
was constantly increasing its returns and the needs were 
constantly diminishing? The fact is that Carey, at this 
point of the discussion, has in mind a primitive econ- 
omy. ®' This is no ultimate doctrine. That animals, 
well housed and protected from freezing weather, rains, 
and snow, require a less amount of food to preserve 
them in the same state of health and vigor, is beyond 
discussion. That warm clothing, sanitation, and com- 
fortable housing for people mean a less waste of body, 
and a somewhat less absolute need for food, is a mat- 

^" Principles of Social Science, III, 318. 

'^ lb., Ill, 319. Also ib., chaps. 46, 47, bear on the point. 

*>* Mr. Carey should have remembered that clothing and general com- 
forts make a demand on the land as much as food does. 

** I take it that needs vary in relation to the standard of living: in 
a primitive economy needs are absolute essentials ; in an advanced econ- 
omy they correspond to the character of desires. 



I30 THE RICARDIAN RENT THEORY 

ter of common knowledge. But at this point the analogy 
between men and beasts breaks. What the desires of 
horses and cattle were a thousand years ago, they are 
to-day. Man's desires, however, are progressive; they 
mount with every additional opportunity for gratifica- 
tion. Desires are the motive force of economic activity, 
and it follows that dynamic progression — the centre of 
Carey's philosophy — is based upon desires for more and 
better goods. To accuse him, then, of advocating the 
point beyond a primitive economy, or at least beyond 
the point where man has secured conveniences to con- 
serve his animal heat, is to accuse him of contradic- 
tion so serious as to wreck his whole philosophy. 

Upon the second possible interpretation, much less 
is to be said. Ricardo limited land, labor, and capital 
to definite units, and gave them a mathematical expres- 
sion. Not to limit the land factor is, I submit, to dodge 
or pass over the diminishing-returns issue in the Ricar- 
dian sense. This Carey did. There is not a sentence 
in his hundreds of pages on rent and population which 
claims that constant expenditures on a limited specific 
area bring an ever increasing return. His was a differ- 
ent theme — from poor land to fertile, which I shall term 
a land-supply concept. His reasoning was upon an en- 
tirely different basis. He did not preach increasing 
returns on a limited area of land. '^^ If a farm on the 
hill-side showed constantly increasing returns, it would 
soon be more productive than the low lands. If the 
farmer's first expenditure, or first dose, on the limited 
area, yields lo, his second 12, his third 15, on up to 100 

8^ Sherwood, S., Tendencies in American Ecowomie Thought. Professor 
Sherwood argues to the effect that Carey did deny Ricardian diminish- 
ing returns, and, so far as I know, gives the hest availahle argument 
for that contention. Professor Sherwood, however, makes no distinction 
between diminishing returns on a limited area under static conditions 
and diminishing returns relative to the whole industry over a long period 
of time (20-23). My contention is that the two are essentially different. 



HENRY CHARLES CAREY 131 

and beyond, what possible excuse could he have for 
moving to the low lands? There is no evidence that 
Carey regarded the process of moving as a particular 
source of large fortunes. 

While Ricardo based diminishing returns upon his- 
toric conditions, his formula or his mathematical ex- 
pression of it was static, and could serve only as a meas- 
ure of static conditions. He assumed conditions in a 
given state of advancement. At the same time, he recog- 
nized the Malthusian tendency of population to out- 
strip the means of subsistence. Thus he yoked a static 
with a dynamic concept. Consequently, he over-empha- 
sized the principle of resistance in agricultural industry, 
to the neglect of inventions in the industry as a whole. 
His prophecies as to resulting conditions were, conse- 
quently, extremely pessimistic. They have been falsified 
both in England and America. It was this that raised 
the ire of optimistic Carey. The conclusion is that 
the first two of these possible interpretations were not 
entertained by Carey. He never thought that, as civil- 
ization took a higher form and became more complex, 
our needs and demand for goods would diminish. 
Neither did he believe that the application of more and 
more units of labor and capital on a limited area would 
show constantly increasing returns. 

Yet he preached increasing returns. This brings us 
to the third, and to what I believe to be the correct, 
interpretation of his idea of returns from land. It must 
not be forgotten that his thought was dynamic, that 
his environment was one of growth and change, and 
that, in conformity, his economy was dynamic. To him, 
land was not a fixed factor in production as it was with 
Ricardo. The limited-area concept was absent from his 
reasoning. Diminishing returns to him were quite dif- 



132 



THE RICARDIAN RENT THEORY 



ferent from a mere denial of diminishing returns in the 
static sense in which Ricardo conceived them. The 
problem to him was a dynamic one, over a long period 
of time. He conceived returns in the light of growing 
skill, and of industrial and technical developments, that 
multiply with the growth of capital and population. In- 
creasing power results in the better utilization of land, 
in the harnessing of new lands, in the substitution of 
richer, better lands for old lands. 

Growing power to increase the land-supply or real 
productive power of the earth was, I submit, the central 
idea in Carey's reasoning on returns. This was no denial 
of Ricardian diminishing returns. Their problems were 
entirely different — static and dynamic returns are dif- 
ferent species. 

Carey's writings are on the border line, if indeed they 
do not suggest what I believe to be a truer statement of 
proportionality than has been given. Recent thought, 
however, seems to owe more to Hobson, ^'^ Clark, ^^ and 
Cannan, ^^ because of their extension of the application 
of the rent-doctrine, than to older writings on the sub- 
ject. To avoid reading trains of thought into Carey 
which belong more to recent writers, I shall assume 
full responsibility for the following remarks, which, it 
is hoped, will present a truer statement of the differ- 
ence between Ricardo and Carey. 

Land, like labor, money, or tools, is a productive 
factor. The supply of productive factors is measured 
by their yield and not by their bulk. The number of 
laborers does not tell us the supply or productive power 

^ Hobson, J. A., The Law of the Three Rents, in Quar. Jr. of Eco- 
nomics, 1891, V, 263-288. 

"^ Clark, J. B., Distribution as Determined by a Law of Rent, in Quar. 
Jr. of Eco., 1891, V, 289-318; A Universal Law of Economic Variation, 
in Quar. Jr. of Eco., 1894, VIII, 261, ff. 

^ Cannan, E., Origin of the Law of Diminishing Returns, 1813-15, in 
Economic Journal, 1892, II, 53-69. 



HENRY CHARLES CAREY 133 

of labor. We must know of their skill, strength, and 
organization. The number of dollars does not tell us 
the supply of money; the value and rate of turnover 
of these dollars must be known. With the land-supply, 
the case is not different. The land-supply is the avail- 
able force or power to do the land-work. The land- 
supply consists of available or effective utilities and not 
of potential utilities which may be harnessed in the 
future, or when new conditions arise. Location, fertil- 
ity, and intensity of cultivation must be considered, as 
well as area, when reasoning on the land-supply. 

Any productive agent is economically non-existent 
until its potential utilities become effective utilities. ^° 
Gold at the bottom of the sea is economically non-exist- 
ent because it has only potential utility. Gold in a na- 
tional bank is economically existent; it has effective 
utility. The effective utiHty of land is the supply of 
land; the swamp lands, in the Carey use — all lands, 
under given industrial conditions, which are beyond 
man's control, which in no way contribute or can be 
made to contribute to his needs — are economically non- 
existent. They are no part of the economic supply of 
land. No one claims that fur-bearing animals in the 
wilds of Siberia, beyond the reach of man, compose 
a part of the supply of furs. Yet their name is legion 
who affirm that the supply of land is fixed, thus includ- 
ing lands impossible of utilization under existing circum- 
stances. The greatest enemy of some of their ideas is 
other of their ideas. Canals, like the Panama, that will 
make possible the drainage and cultivation of lands 

TOVeblen, T., On the Nature of Capital, in Quar. Jr. of Eco., August, 
1908, 523. Commons, J. R., says, "The gifts of nature become capital 
as soon as they are utilized by man. Before they are utilized, they 
have no economic significance and are, therefore, neither capital nor 
land, in the economic use of those terms." The Distribution of Wealth, 
137-138. 



134 THE RICARDIAN RENT THEORY 

whose utility previously had not been dreamed of; rail- 
roads extending quick, cheap transportation into the 
interior, thus converting waste lands into corn and wheat 
fields; extensive systems, of irrigation that banish na- 
ture's lottery of seasons and rains — these are increasing 
the effective utilities, the land-supply, extensively. Sub- 
soil plowing — working down into the earth, building 
upon the soil, any means of more intensive cultivation 
— ^any means of compelling a limited area to contribute 
more to the needs of man than before, is to convert 
potential into effective utilities — to increase the economic 
land-supply. This does not mean that potential utilities 
are without influence on supply: let the demand become 
stronger, and force is applied to the harnessing of poten- 
tial utilities. It does mean that potential utilities are 
not a part of the supply. Not to distinguish between 
"amount of land" and land-supply is a source of confu- 
sion. '^^ More intensive and more extensive utilization 
result in precisely the same thing — more effective util- 
ities, a greater land-supply. For the economist to reason 
on the acre-basis rather than on an effective-utility-basis, 
is to shift from an economic to a physical point of view. 
An acre of land is an acre of land, be it on the top of Mt. 
McKinley or on Wall Street. What of their productiv- 
ity, their value, their capitalization ? These are economic 
questions. The acre is a mere measure, an area-test, 
of a physical entity — that is all. 

In old or new lands, potential utilities resist being 
harnessed; some such utilities are further than others 
below the margin of utilization. This is a matter of 
degree, not of kind. Whether extensive or intensive, 
such utilities resist being harnessed. This may be 

■"Fetter, F. A., The Principles of Economics (2d ed.), N. T., 1910, 
155-158. 



HENRY CHARLES CAREY 135 

termed "the principle of resistance." This brings us 
to a further conclusion of great significance, heretofore 
unnoticed, namely, that it is impossible to tie down any 
one agent in our reasoning on proportionality, and to 
treat it as a limited, or definitely fixed, factor. These 
truths, differentiation between effective and potential 
utilities in determining supply and the principle of re- 
sistance, are applicable to all productive agents. They 
are illustrated by the discussions on the quantity theory 
of money. Their essence is embodied in such expres- 
sions as "The nimble sixpence does the work of the slow 
shilling." ^- "The money force, or supply of money, is 
composed of two factors — the amount of 
money and the rapidity of circulation." '^^ Resistance 
is here implied, of course ; else one coin would be a 
national supply. The reasoning applies to horse, laborer, 
machine, and all productive agents, in the same way 
and for the same reasons that it applies to land and 
money. 

If it be realized that a product is, under complex 
industry, a resultant of numerous indirect agents, ^* and 
that all indirect agents are alike subject to the "principle 
of resistance," it follows that "diminishing returns" is 
simply a law of proportionality, with no fixed factors ; 
^nd that all factors are adjusted, or the attempt is to 
adjust them, so that the maximum efificiency of produc- 
tion will result. Such adjustment, equilibrium, or pro- 
portionality is an industrial ideal, and all efforts to 
attain it are, and must be, based upon the general prin- 
ciple of resistance. 

In America, where land was so rich and abundant, 

■'^ Walker, F. A., Political Economy (Adv. Course, 3d ed.), N. T.> 
1888, 131. 
''■'^Ib., 131. 
'* See example of the day laborer's coat. Adam Smith, op. cit., I, 13. 



136 THE RICARDIAN RENT THEORY 

economic advancement was striving toward that eco- 
nomic goal — a proportionality of factors. In a new 
country, every step approaching that proportionality is 
attended with larger returns than the preceding step. 
Such environment produces subtle and inexplicable 
forces that bend action, and force thought into new 
channels. "American economists from the time of 
Carey have naturally thought of change and progress 
as normal, and have protested against the assumption 
of fixity of customs, in social institutions, in the land- 
supply, in the labor-force, and in the industrial pro- 
cesses." ^^ Now that the supply of productive agents 
is elastic, and that resistance must be overcome in secur- 
ing more effective utilities from these agents, and that 
a product is the resultant of numerous indirect agents, 
it follows that the proper proportioning of these agents 
must be based on the principle of resistance or diminish- 
ing returns. 

The entrepreneur's problem is largely one of propor- 
tionality. He must so apportion productive factors as 
to secure the best adjustment of means and ends. He 
must meet the demands of the market. This is a prob- 
lem of change and progress, of living force and move- 
ment; therefore the dynamical problem of substitution 
is ever confronting him. There is the double problem 
in proportionality of apportioning the productive factors 
and of apportioning the whole establishment to the extent 
of the market. This, should we take the space to argue 
it, would lead to the conclusion that, when the point 
of greatest net return is reached, more money would 
not be invested in the plant. The securing and main- 
taining proportionality is inseparably connected with the 
principle of substitution. In fact, substitution is the 

''^ Fetter, F. A., Publications of the American Economic Association, 3d 
series, XI, No. 1, 135. 



HENRY CHARLES CAREY 137 

means to that end. Now that diminishing returns is 
common to all productive agents, the proper apportion- 
ing of these factors in productive enterprise must be 
based on this general principle of resistance; therefore 
the principle of substitution must vi^ork in conformity 
with diminishing returns. '® 

In the cooperation of productive factors, the ideal 
is to secure such an adjustment as will yield the great- 
est net return. More of a single factor than the ideal 
proportion demands, is unnecessary cost. Less of a 
single factor than a proper apportionment demands, indi- 
cates unnecessary cost on the part of the other factors 
in the cooperation. Disproportionality means diminish- 
ing returns; substitutions or readjustments that bring 
about or approach true proportionality, will augment 
returns. Whether long factors will be substituted for 
short, or the reverse, is a question partly of anticipated 
value-return and partly of the comparative productive 
monopoly held by particular factors. For these reasons, 
long factors will not be increased. This would disobey 
the law of demand which tends to equalize marginal 
utilities, and would be unwise investment. In a pro- 
ductive establishment, land, labor, and capital are coor- 
dinated; and each employs the others, so to say. More- 
over, various competing uses are demanding each of 
these factors. A short factor cannot bid strongly enough 
to cause an increase of factors which are already too 
strong in the same establishment. If it could, it must 
be stronger than any competing use, but this would in- 
volve the absurdity that all competing uses are subject 
to still greater diminishing returns than itself. In a 
purely agricultural society where land, labor, and capital 

■^fl See Marshall on the relationship of the principle of substitution to 
diminishing returns, Principles, 355-356, 435. 



138 THE RICARDIAN RENT THEORY 

are devoted almost exclusively to agriculture, the range 
of substitution is comparatively limited. Alternate de- 
mands are few. L,and in a particular location gradually 
becomes the short factor as labor and capital are in- 
creased. The demand for adjustment increases with the 
growth of disproportionality. Substitution must be 
made; but, in the very nature of the case, the long 
factors — labor and capital — cannot be adjusted to the 
short factor, land. Land must be adjusted to the other 
two. It is very evident that substitution is made because 
of diminishing returns on a limited area. Should we 
assume long factors to be adjusted to a short factor, 
it is still true that the purpose and act of substitution 
is based on diminishing returns. Movement from poor 
land to rich is substitution based on the land-supply con- 
cept. Such substitution confirms diminishing returns on 
a limited area. '^^ 

We conclude that the supply of the productive powers 
of factors or their effective utilities is elastic, that resist- 
ance must be overcome in the conversion of potential 
into effective utilities, and that the problem of dispro- 
portionality arises out of differences in the degree of 
resistance to be overcome in apportioning factors, or 
in increasing the supply of short factors. Substitution 
by avoiding greatest resistance seeks the easiest means 
of increasing supply. To advocate the law of substitu- 
tion in production, except in cases of indifference, is 
logically to affirm diminishing returns. The substitution 
of new lands for old, or the use of new lands rather 

■"" In fact, this law of substitution simple pervades Carey's whole 
economy. Power over nature grows with the substitution of improved 
instrumentalities ; from the use of the pack-saddle to the railroad car ; 
from the canoe to the steamer ; from the poorer to the richer soils ; 
from animal to vegetable products ; from the vegetable to the mineral 
kingdom — at every stage substituting the cheap and abundant for the 
costly and scarce— thus progress is exhibited in the steady advancement 
from savagism up to the highest attained civilization. (See Dr. William 
Elder, Memoir, 9.) These are of his most common expressions. 



HENRY CHARLES CAREY 139 

than a more intensive utilization of old lands, as popu- 
lation and capital grow, is based on the law of diminish- 
ing returns. 

To attain superior adjustment of means and ends is, 
consciously or subconsciously, the ambition of all busi- 
ness concerns. It is the aim of all economies. This 
being true, the very fact that land was the short factor 
in the England of 1817 and the long factor in the Amer- 
ica of 1848, helps us to account for these different 
economies. 

With the law of substitution in mind, of which Carey 
made so much, I hope we are ready to state the differ- 
ence between Ricardo and Carey on returns. In con- 
formity with English conditions and with the thought of 
Malthus and especially Sir Edward West, we find that 
Ricardo's concept of diminishing returns, his statement 
of it, and his mathematical expression of it, were static, 
and were confined to a limited area. 

In conformity with rapidly changing conditions in 
the United States, and with his own way of thinking, 
Carey's concept of returns was dynamic. He thought 
of returns over a long period of time and without limit 
as to area. Taking this view of the question, only false 
reasoning could lead him to any other conclusion than 
that returns from land would increase with the growth 
of skill and science, of population and wealth. 

Static diminishing returns and dynamic increasing re- 
turns have little or nothing in common. They are dif- 
ferent species. To affirm the one is in no sense to deny 
the other. ''^ 

We are brought to the interesting question, Did Carey 
deny Ricardo's concept? We might answer that he 
had nothing to say on a static concept of returns rela- 

■ra Marshall, op. cit, 165. 



140 THE RICARDIAN RENT THEORY 

tive to a limited area. Seemingly he misunderstood what 
it was that Ricardo taught. In the absence of a specific 
statement, however, his teaching, as we believe, would 
rather confirm than deny the Ricardian concept. If not, 
why did he think that population would become too 
dense? This was his opinion in 1848 before he had 
found a check to over-population. Why did he look for 
the relief of over-population in the harnessing of new 
lands? Above all, the law of substitution was a salient 
feature of his economy. This law was so prominent 
that Dr. Elder spoke of it as a leading feature of Carey's 
writings. 

In Ricardian usage, land, labor, and capital were the 
productive factors. The essence of the problem con- 
fronting Ricardo was the disproportionality of these 
factors. Land ("being fixed") grew proportionately 
shorter with the increase of labor and capital. This is 
to say, it showed diminishing returns. Of course, re- 
turns are reckoned relative to the whole investment, 
though, in Ricardo's mind, land was the particular 
source of increasing costs. 

Moreover, the problem confronting Carey was one 
of disproportionality. Briefly, what were his views? 
Population first settles on the poor land. Capital and 
labor increase until land becomes the short factor. 
Meanwhile, increased strength enables them to appropri- 
ate a more fertile tract. After a time, this becomes the 
short factor, and so on until the most fertile tract is 
reached. Every movement is based on the principle of 
diminishing returns. 

We conclude that the views of these two famous econ- 
omists were not opposite views of the same thing. Their 
economics were upon different bases; two different eco- 
nomics from two different premises of fact and view- 



HENRY CHARLES CAREY 141 

point ; the one was an outgrowth of industrial and social 
conditions in the England of 1817; the other was an 
outgrowth of industrial and social conditions in the 
America of 1848. ^^ Ricardo's diminishing returns and 
Carey's land-supply concept are both essential to a true 
law of diminishing returns. 

The reason for the common opinion that Carey denied 
diminishing returns in the Ricardian sense is, I believe, 
that critics have made the common shift from static 
conditions on a limited, specific area to dynamic condi- 
tions covering the whole industry over a long period of 
time. Taking the latter, which is an entirely different 
problem, Carey was right. Looking either backward or 
forward, to the past or to the future, the whole industry, 
in the historical sense, shows increasing returns. Other 
reasons are that only effective utilities compose the land- 
supply or the supply of any factor. These compose the 
force, the available power to perform the functions of 
productive factors. Proportionality is worked out upon 
this principle, but in all adjustments tending toward pro- 
portionality, the law of substitution is assumed; it is the 
means to that end. This law, in turn, is generally based 
on diminishing returns. Therefore, having shown at 
length, that Carey's contention was for substitution for 
the short factor, land, we have shown that, in reality, he 
confirms diminishing returns, though he nowhere specifi- 
cally mentions that law in the sense that Ricardo used it. 

It would be merely repetition to present the argu- 
ment of those who frankly acknowledge Carey as their 
master and whose writings are no more than expositions 
of Carey's system in the form of text-books. 

E. Peshine Smith was a devoted disciple whose Man- 
ual of Political Economy (Philadelphia, 1853) is only^ 

" Gide and Rist, Histoire des Doctrines Economigues, 388-389. 



142 THE RICARDIAN RENT THEORY 

an exposition of Carey's thought in small compass. 
Other followers of Carey, although they do not fall 
within the compass of this study in that they did not 
write on rent, are Charles Nordhoff, Horace Greeley, 
Ralph Waldo Emerson, Stephen Colwell, and William 
Elder. 

Robert Ellis Thompson's Social Science and National 
Economy (Philadelphia, 1875) is worthy of special men- 
tion, not because he added anything to Carey's thought, 
but because of the wealth of historical evidence which 
he marshalled in support of Carey's views. 

Professor W. D. Wilson, a follower of Carey, teaches 
that cultivation begins "on the hillsides, or hill tops, 
where the woods are easily cleared, and where they 
are free from the dampness and malaria of the lower 
but more productive soils." ^° He teaches that the value 
of land is equal to the cost of its reproduction. ^^ He 
classifies land as capital. ^- Likewise on capital, wealth, 
and the law of diminishing returns, he is in essential 
agreement with Carey, although he was less optimistic. ^^ 

The next chapter will be devoted to Francis Bowen, 
who like Carey was a national economist and gifted 
writer. 

80 Wilson, W. D., Political Economy, 92. 
«i/&., 92. 93. 

82/&., 110. 

^Ib., 308-321. 



CHAPTER VII 
FRANCIS EOWEN 

FRANCIS BOWEN^ (1811-1890) was born at 
Charlestown and died at Cambridge, Massachu- 
setts. He was a pupil in the common schools 
of Boston, attended Phillips Exeter Academy, and was 
graduated, the first scholar in his class, at Harvard in 
1833. Immediately after his graduation, he became a 
tutor in Greek, and, soon afterwards, wrote the lives 
of some prominent statesmen for Spark's Library of 
American Biography. Resigning at Harvard in 1839, 
he spent two years in travel and study in Europe. While 
abroad, he met Sismondi and other notable scholars. He 
returned to Cambridge in 1840, and spent the following 
twelve years in literary pursuits. He was editor and 
proprietor of The North American Review for eleven 
years (1843-1854) ; and, in addition, he edited The Amer- 
ican Alm^anac and Repository of Useful Knowledge. 

1 References: (1) National Encyc. Amer. Bing., XI, 452. (2) Encyc. 
Britannica, 11th ed., IV, 342. (3) Encyc. Americana, III. (4) Pal- 
grave, Uict. Pol. Econ. (by F. W. Taussig), I, 175. 

Professor Bowen was the author of a large number of books on a 
variety of sub.iects. He wrote on history, politics, education, political 
polity, philosophy, metaphysics, literature, and religion. 

Luigi Cos.sa (An Introdvction to the Study of Pol. Econ., London, 
1893) said: "In more recent years the late Professor Bowen of Harvard 
College proved himself the ablest member of this school [The National 
and Cosmopolitan School], and wrote a treatise which defended the 
'banking principe' and rejected the wage-fund as well as the theory 
of rent. He further denied the practical value of Malthus' views for 
America, where the farmer owned his own land and every workman was 
a capitalist." Professor Taussig said: "His economic ■WTitings in the 
main are in the nature of text-books, stating and illustrating the doc- 
trines of the classical economists. But on the subject of international 
trade he diverged, and reasoned in favor of the doctrine of protection. 
He laid stress on the need of national independence, and of aiding 
young industries; and he made application also of Mill's reasoning as 
to the possible effects of duties on the play of international demSnd 
(Palgrave's Dictionary, 1894 ed., 175). 



144 '^^^ RICARDIAN RENT THEORY 

He delivered two courses of lectures on metaphysical 
and ethical sciences during the years 1848-9 at Lowell 
Institute. In 1850, he was elected professor of history 
at Harvard. But he had taken the unpopular side on 
the Hungarian question in his articles contributed to 
The North American Review; and as, for this reason, 
the Board of Overseers failed to concur with the cor- 
poration, he retained his position only six months. Three 
years later, however, he was elected Alford Professor 
of Natural Religion, Moral Philosophy, and Civil Polity, 
a position which he retained to within a few months of 
his death. 

He was profoundly rehgious, a staunch defender of 
the Bible, and an opponent of Darwinism. His religious 
convictions so pervaded his thought that a strong theo- 
logical element is made the basis of his system of eco- 
nomic science. A deep devotion to religion colored his 
every principle and thought. 

The decade previous to the Civil War was not pro- 
lific of works on economics. The stimulus afforded to 
our economists by English publicists ceased to be active 
after Mill's publication in 1848. A furious tariff strug- 
gle at an earlier date was the direct cause of numerous 
works on political economy, but this issue had been set- 
tled for two decades. Currency and banking had ceased 
to be paramount issues. The great sectional question so 
engaged the attention of the public that considerations 
primarily economic were reduced to a subordinate rank. 

It was in this period (1856) that Bowen's book ap- 
peared. Professor Dunbar tells us, however, that the 
book was compiled by the author's throwing "into con- 
nected form a long series of articles and lectures pro- 
duced by him in the preceding ten years." ^ Recasting 

2 Dunbar, Essays, 12. 



FRANCIS BOWEN 145 

familiar materials, the author succeeded in adding a 
freshness to the old topics by a discussion often vigor- 
ous and full of emotion. Bowen had unbounded faith 
in his country ; his book produces on the mind an impres- 
sion like that which the young America it describes 
makes upon the imagination. It overflows with hope- 
ful energy, like that which brings encouragement to the 
unsuccessful worker in the crowded places of the Old 
World, when he thinks of a new country to which he 
may carry his willing hands and his ambitious hopes. 

Our author was a national economist ; he entitled his 
work American Political Economy. His method of rea- 
soning and the character of his economic studies made 
descriptive writers like Samuel Laing particularly inter- 
esting to him. His own work so abounds in the descrip- 
tion of conditions that he loses sight of fundamentals. 
He fails to see the woods because of the trees. It can- 
not be said that in his whole discussion on rent, he 
either tells what the rent-thing is or gives any positive 
theory to account for its origin, its increase, or its dim- 
inution. Though defining political economy as a science, 
he proceeds to treat it as an art. His splendid com- 
mand of English together with his habit of introducing 
profound questions tends to make his work charlatanic, 
wheedling, sentimental, and, at times, deceptive through 
a skillful use of fair words. 

The title, American Political Economy, ^ deserves 
comment. In the preface to this work, he says, "The 
title under which the book now appears may seem to 
require defense or explanation. I hold, with Mr. Samuel 
Laing, that 'every country has a Political Economy of 

* The title of his edition of 1856 was, The Principles of Political Econ- 
omy applied to the condition, the resources, and the institutions of the 
American People, the edition of 1870 was titled, American Political Econ- 
omy, etc. 



146 THE RICARDIAN RENT THEORY 

its own, suitable to its own physical circumstances of 
position on the globe/ and to the character, habits, and 
institutions of its people." * 

He admits that certain economic principles are gen- 
eral, and applicable to "all nations under the sun." 
"But," says he, "it must be admitted, I think, that these 
universal principles are comparatively few and unim- 
portant, and if the science were limited to them, it would 
be of narrow compass and limited utility." ^ 

Professor Bowen believes that the science must be 
treated inductively, and that, although Ricardo, J. S. 
Mill, and their followers professed to treat the subject 
deductively and in the abstract, so that their conclu- 
sions could be universally applicable, yet "The system 
which they expounded is really the Political Economy 
of England alone, and is even more characteristic and 
peculiar than her social organization and civil polity." ^ 
He claimed with truth that English circumstances and 
problems received undue attention , as compared with 
other problems of equal importance in a well rounded 
system of distribution. 

Bowen's starting point, or first assumption, is that a 
certain thing is desirable, that this is a good or that is 
an evil. His problem was to acquire the good and to 
avoid the evil. He would use economics as a portion 
of that art of statesmanship. Bowen insists upon the 
utility of laissez faire and of the natural order, yet he 
makes a plea for governmental restraint both internal 
and external. He is anxious to preserve "the benevolent 
purpose of the Designer" which turns the course of 
the self-chosen effort of individuals toward the common 
defense and the general prosperity of all. He tells us 

^ Bowen, American Political Economy (2d ed.), iii. 
^ lb., iv. ' n., V. 



FRANCIS BOWEN I47 

that the attempts of legislators to turn the industry of 
society in one direction or another, out of its natural 
and self-chosen channels are almost invariably product- 
ive of harm. Yet the leading characteristic of his entire 
work is an elaborate defense of protection. 

Under his treatment, laissez faire acquires a somewhat 
ludicrous sense. The laisses faire that Bowen conceived 
would not ask the government to keep its hands off of 
industries ; rather it would preserve precious liberty to 
the individual by tying the hands and feet of everybody 
else, lest he should be interfered with. ' Bowen thinks 
the benevolent purpose of the Designer is to cause the 
acts of those who are thinking only of their own credit 
and advantage to benefit others. ^ 

"We are all servants of one another without wishmg 
it, and even without knowing it ; we are all cooperating 
with each other as busily and effectively as the bees in 
a hive, and most of us with as little perception as the 
bees have, that each individual effort is essential to the 
common defense and general prosperity. ^ 

Bowen advocated limitations of the laissez faire doc- 
trine. Legislative prohibition of vice and crime only 
remove stumbling blocks that obstruct the working of 
the natural laws. "To remove such stumbling blocks, 
then, is not to create, but to prevent, interference with 
the natural order of things. Legislation directed to this 
end is only a legitimate carrying out of the laissez faire 
principle." " He extends this principle until it encom- 
passes the prevention of external dangers and hind- 

•r North American Reviev>, (July, 1870) HI. .246 Bowen PoWi^ai 
Economy, ed. 1856, 20, 23, 27. Bowen, Amerccan Pohhcal Economy, 
18-22. 

"Bowen, Political Economy (1856), 20. 

«7b., 27. 

!»/&., 23-24. 



148 THE RICARDIAN RENT THEORY 

ranees, and allows for retaliatory legislation as between 
nations. ^^ 

In his estimation, differences in the economy of na- 
tions make necessary certain restrictive legislation in 
order that the people of a nation may thus procure 
larger liberty than they would otherwise enjoy. Our 
author's conception of the principle of laissez faire 
makes this doctrine a basis, or rather a demand, for a 
protective tariff. 

Bowen's opinions on value and wealth are very unlike 
those of the English economists. Because these opinions 
are preparatory to the rent problem, I shall now review 
them. His reasoning on value is strictly limited to the 
concept of exchangeable value. ^" Exchangeability de- 
pends on the utility of a commodity together with its 
difficulty of attainment. ^^ Then, too, he says, the value 
of a machine may be either the labor which it saves, 
or the labor which it costs. Thus, in his discussion of 
value, at least three unlike concepts appear. 

His definition of wealth is broad enough to include 
those agencies, material or immaterial, which render 
gratification to our desires. He says : 

Many Political Economists exclude immaterial products from 
their definition of wealth because the labor which is devoted 
to such products ends in immediate enjoyment, without any 
increase of the accumulated stock of permanent means of en- 
joyment. "When a tailor makes a coat and sells it," argues 
J. S. Mill, "there is a transfer of the price from the customer 
to the tailor, and a coat besides, which did not previously 
exist; but what is gained by an actor is a mere transfer from 
the spectator's funds to his, leaving no article of wealth for 
the spectator's indemnification." We reply, that the purchaser 
obtains only a gratification of desire in either case. From the 
coat, he has moderate enjoyment prolonged for some months; 
but he might do without it, and work in his shirt-sleeves. From 

^Ib., 25. 

^ Bowen, American Political Economy, 33. 

'^ Bowen, Political Economy, 32. 



FRANCIS BOWEN 



149 



the theatre he has keen enjoyment that lasts only a few hours; 
and he may prefer such pleasure to the luxury of additional 
clothing. It is inconsistent to give the name of wealth to 
what pleases our palates for a moment, and deny it to what 
gives keener pleasure to our ears. The characteristic of all 
wealth is, directly or indirectly, to satisfy some want, or gratify 
some desire. Food which is ready to be eaten is wealth, just 
as much as the knives and forks with which we eat it; though 
the former is devoured at once, and there is an end of it, while 
the latter may remain in daily use for years. ^* 

This reasoning attaches the concept of weaUh to 
usance rather than to productive agents themselves. In 
fact, his whole thought seems to center on returns rather 
than upon the nature of the agency giving origin to 
returns. Consequently personal services, the produce 
of capital agencies, and the produce of the land would 
be treated by the same law. Then, as we shall see, he 
finds profits and rent to be one and the same thing. His 
distinction between them is only in name. 

"Malthus on population and Ricardo on rent are the 
great dragons against which he feels bound to do vigor- 
ous battle." ^^ True to his environment he claims that 
"down to the present day, the only evil which has been 
felt has been, not an excess, but a deficiency, of popula- 
tion." ^® He dwells upon the ambiguity of the word 
"tendency" in the discussion of Malthus, and paints 
a most horrible picture of the consequences of that 
author's reasoning. ^^ 

After stating the Malthusian doctrine and pointing 
out its consequences, he, taking the theological point of 
view, says : "I hope to prove satisfactorily, that the 
doctrine itself is a mere hypothetical speculation, hav- 
ing no relation to the times in which we live, or to any 

^* Bowen, American Political Econo')ny, 1-2, note. 
'^^ North American Review, July, 1870, III, 246. 
" Bowen, Political Economy, 137. 
"/&., 139-140. 



I50 THE RICARDIAN RENT THEORY 

which are near at hand. In those facts which appear so 
alarming to the Malthusians, I see only indications of 
a beneficent arrangement of Providence, by which it is 
ordained that the barbarous races which now tenant the 
earth should waste away and finally disappear, while 
civilized men are not only to multiply, but to spread, till 
the farthest corners of the earth shall be given to them 
for a habitation." ^® 

Taking the dynamical concept of returns, he claims 
that if population increases even in a geometrical ratio 
no scarcity would be produced for centuries. "The great 
and palpable error of the Malthusians consists," he de- 
clares, "in assuming, without a particle of evidence, nay, 
when all the evidence tends to the contrary, that the 
time has already come, that population has reached its 
limits, that there is even now a deficiency of food so 
that the only present mode of increasing the happiness 
of the lower classes is to lessen their numbers." 

He claims that Malthusianism is, in its simplest form, 
only an expression of a law that belongs both to the 
vegetable and animal kingdoms. He admits the truth 
of its tendency, yet claims that it has no applicability 
to the present state of affairs. He thinks that the appli- 
cation of this doctrine to the affairs of man is as remote 
as the loss by the sun of its heat. But if a person begin 
to economize oil, candles, and fuel, for that remote day, 
"his friends would reasonably be alarmed for his sanity, 
and would urge him to retire for a while to a mad- 
house." ^^ 

He shows that the population of Belgium (1846) was 
344 persons to the square mile. They lived in comfort. 
From this example, he conclndes that the time is beyond 

18/&., 141. 
!»/&., 141-2. 



FRANCIS BOWEN 151 

our imagination when the entire earth will be as densely 
populated as that country. ^° He uses the argument so 
frequently advanced by his American predecessors, that, 
while there will be more work to do with the increase 
of numbers, yet there will be more hands to do it. At 
this point, he admits diminishing returns in the historical 
sense, but considers the principle of no particular sig- 
nificance. '^ He thinks that it is a faulty distribution 
rather than the niggardliness of nature which causes 
poverty. -- On this point, his views are precisely the 
same as those of Daniel Raymond. 

Erroneously, I think, he claims that a disproof of 
Malthusianism is found in the fact that nations, espe- 
cially barbarous and half -civilized nations, have, in his- 
tory, diminished in numbers as a result of war, famine, 
disease, vice, and ignorance, but that their diminution 
has not been occasioned by the niggardliness of nature. 
He says, "The wasting away of such tribes may be, in 
some cases, the consequence of a deficiency of food ; but 
it is certainly not the result of over-population ; for the 
civilized men who come to occupy their places, obtain 
from the same soil abundance of food for a population 
larger than theirs by twenty or a hundred fold." ~^ He 
cites the case of the North American Indians as an 
illustration. Malthus certainly would have agreed with 
this statement, for in his contention that population does 
press and has actually pressed upon the means of sub- 
sistence, his view was static rather than dynamic. He 
considered conditions at the time being. What are the 
facts under the existing circumstances, not what would 
they be under more advanced and different circum- 
stances, was the problem in the Essay of Malthus. 

20 /b., 142-44. 21 /&., 144-45. '^ lb., 145. 
'^Ib.j 145-6; quotation from 146. 



152 THE RICARDIAN RENT THEORY 

Bowen then advances the argument previously urged 
by A. H. Everett, namely, that with money I "can pur- 
chase food of my neighbor, that I can even lay the fer- 
tility of both Indies and of the farthest corners of the 
earth under contribution to supply my personal wants. 
Communities and nations act, in this respect, just like 
individuals." In other words, his thought is that a 
nation is not fed necessarily by the products of its own 
soil, but that, through exchange, any people may com- 
mand the products of any part of the world. There- 
fore, if diminishing returns in agriculture so act in a 
particular section of the world as to limit the necessities 
in that locality, the people there will turn to other indus- 
tries and will depend on other sections of the world for 
their necessities. He, like Everett, thought such an argu- 
ment would defeat the evil consequences of diminishing 
returns. ^* 

Such an argument, it should be noted, does not over- 
come the consequences of diminishing returns, but 
merely shows how its immediate effects may be averted. 
As we have seen. Cooper's reply to Everett's statement 
on this point seemed conclusive. 

This fact of the people's drawing their support from 
all parts of the earth is cited by Bowen as one of "the 
two great facts which afford a complete refutation of 
Malthusianism." ^^ The second "great fact" which, he 
claims, affords "complete refutation to Malthus," is "that 
the practical or actual limit to the growth of population 
in every case is the limit to the increase and distribu- 
tion, not of food, but of wealth." -® This is to say that 
there is, and will be, a bountiful sufficiency of necessi- 
ties for an augmenting population, and that the real 

^Ib., 146-7; quotation from 146. 
2S/&., 148. 
2»/6., 148. 



FRANCIS BOWEN 153 

problem lies in the securing of such a distribution of 
purchasing power as will enable the supply of necessities 
to be adequately utilized by all men. 

These two arguments are corollaries in that the one 
must accompany the other, in order to refute the sup- 
posed dictum of Malthus that population is limited by 
the productivity of the soil it occupies. Through a 
faulty distribution, he accounts for the famine of 1847 
in the British Isles. At any one time, there is no gen- 
eral famine the world over; want in one section of 
the world may be supplied by other sections ; therefore, 
if the distribution of wealth, or purchasing power, be 
adequate, famine would be an impossibility. "In 1847, 
the bounty of Providence to the British Isles did not 
fail ; shiploads of corn were turned away from their 
shores for want of a market. The granaries of two 
Islands were filled to overflowing, not indeed from the 
products of their own harvests, but from the immense 
supplies poured into them by our ever-teeming land. 
The fate of the Irish and Scotch appeared 
the more terrible, because they starved in the midst of 
plenty." " 

Professor Bowen accuses Malthus of a fallacy of 
inversion. In reply to the contention of Malthus that 
population grows in response to an increase of sub- 
sistence, our author says : "More grain is raised because 
there are more men who need it, and not more men 
are raised because there is more grain to feed them 
with. Procreation is not stopped because there is no 
more grain, since misery and peril of starvation only 
make men reckless, and cause them to multiply faster. 
But agriculture is stopped when there are no more 
mouths calling for food ; a cessation of demand causes 

^''ib., 149-150, quotation from 150. 



154 THE RICARDIAN RENT THEORY 

a cessation of supply here, because the husbandman is 
looking only for pecuniary gain." -^ "It is not the excess 
of population which causes the misery, but the misery 
which causes the excess of population." -® 

Whatever aflfects most strongly the inclination to labor 
and to save, and thus furnishes the stimulus for the 
accumulation of capital, also regulates in a great degree 
the increase of population. Awakened ambition for the 
attainment of riches or for the advancement in society 
cause prudence in one's expenditures, and check one's 
contracting any relations that may become a burden to 
his advancement. In a normal state, the inclination of 
the people to marriage is governed by their opinion of 
the effect which marriage will have upon their position 
in life. ^° "In a newly settled region, children are a 
help to the parents' advancement, because labor is so 
valuable; hence the rapid advance of population in the 
frontier states of our own Union." ^^ He argues that 
children are not as advantageous to parents in case of 
a dense population. In this, he is in harmony with the 
thesis of George Tucker, namely, that the birth rate 
diminishes as the density of population increases. ^- 
His views may be summarized as follows : 

(a) An increased population is desirable in order 
better to utilize the world's natural resources. 

(b) By a beneficent arrangement of Providence, the 
barbarians shall waste away, and civilized peoples shall 
occupy the farthest corners of the earth. 

(c) Necessities will increase faster than a civilized 
population. 

(d) There are historical diminishing returns, but their 

^Ih., 150-1. 
»/&., 152. 
^ lb:, 155-6. 
31/&., 157. 
S2/&., 160. 



FRANCIS BOWEN 155 

evil consequences are so remote as to make them un- 
worthy of consideration. 

(e) Poverty is due, not to the niggardliness of na- 
ture, but to a faulty distribution. 

(f) Population does not depend on the land which 
it occupies for subsistence, but draws from every corner 
of the earth. 

(g) Population is the cause of abundance rather than 
of scarcity. 

(h) The growth of population will be limited more 
and more by the negative check as civilization advances. 

(i) In sparsely settled regions, children are an aid 
to their parents; but, with the increase of numbers, the 
birth rate will decline. 

Bowen regards the Malthusian theory and the Ricar- 
dian theory as phases of the same problem. Therefore 
much that has been said on the population-problem ap- 
plies with equal force to the rent-problem. To the pop- 
ulation-problem, rent is a supplement which "comes in 
to fill up the deficiency in our heritage of woe." He saw 
clearly that the rent and population theories grew out 
of the peculiar social conditions of England, where a 
small class owns the land. Feudal relations have dis- 
appeared there, but the magnitude of feudal estates is 
not diminished. English noblemen have turned their vast 
estates into deer-parks and the rural tenantry has been 
driven into the manufacturing districts. Land-monopoly, 
high rents, and burdensome taxes are characteristic of 
the conditions in England. 

Bowen claims that Ricardo's theory contains few gen- 
eral truths, and is inapplicable in other countries. Eng- 
land alone has a laboring class entirely dependent on 
wages. Ricardo's theory was invented to suit these con- 
ditions. American conditions are the reverse of those 



156 THE RICARDIAN RENT THEORY 

in England. An increase of population in this country 
means increasing rather than diminishing returns, and 
a lower rather than a higher price for food and neces- 
sities. 

Bowen claims that Ricardo's main basis of rent, "the 
original and inherent powers of the soil," is no basis 
for a theory of rent; that these powers may readily 
be produced by labor, and will be if the location justi- 
fies the expenditure for such creation. He also mini- 
mizes Ricardo's other basis of rent, that of location. 
Bowen seems to think that location also is artificial. Loca- 
tion is nearness to population and is created or destroyed 
with the movement of population from place to place. 
From this reasoning, he reaches the conclusion that, 
"Rent depends, not on the increase, but on the distribu- 
tion, of the population. It arises from the excess of 
the local demand over the local supply." Rent is deter- 
mined either by the expense of bringing the food from 
a distance to the population or by the expense and incon- 
venience of the population going to the food. 

Although this reasoning accounts for both the quali- 
ties of land and the location of land as matters of human 
production, yet it implies an admission of the law of 
diminishing returns and proportionality. The need of 
transportation or of the distribution of population over 
the earth is occasioned only by the fact that there exists 
an elastic limit to the productive powers of land in any 
one place. ^^ 

Bowen contends that, with a distribution of popula- 

®* This reasoning further suggests the narrow limitations which Ri- 
cardo's thought placed upon certain of his so-called general suppositions. 
For instance, Ricardo would have the movement of labor from profession 
to profession or from place to place to equalize wages ; now why, by a 
like movement of population, would he not have rents equalized ? His 
assumptions respecting the movement of population in the equalization 
of wages were general; his assumptions respecting the employment of 
labor on different grades of land were local in their application. 



FRANCIS BOWEN 157 

tion over the entire land, rent would not exist, for there 
would be no scarcity of land relative to the demand for 
its products. But, he says, the development of manu- 
factures requires a concentration of industries, so that 
a division of labor can be worked out effectively. Civil- 
ization depends upon a development of all productive 
forces; therefore, such a distribution of population as 
would do away with rent cannot exist. Rent, then, de- 
pends upon the centralization of productive forces and 
the collection (not the increase) of population into towns 
and cities. Local rents depend upon local markets. From 
this argument, he concludes that rents are based entirely 
on the territorial distribution of population. 

Ricardo teaches, at times, that the interests of the 
landlord class are opposed to the interests of the rest 
of the community. Bowen thinks that a rise in rents 
works to the benefit of all classes. Farmers who pay 
the rent are compensated by higher prices for their pro- 
ducts; it is the higher prices which cause rent. More- 
over, they are compensated by the many advantages of 
being in the vicinity of a market. Manufacturers pay 
more for their corn where rents are high ; but, because 
of the same conditions which produce rents, they find 
a readier sale and a higher price for their products. 
Like Carey, Bowen claims that, where the manufactur- 
ing town and the farm are brought together, a positive 
gain results to the whole community because of the 
many advantages of concentrated industries. Concen- 
trated industries make a ready market for all products, 
and permit the best utilization of all productive energy. 
Another "positive gain to the community consists in 
the saving of transportation both ways." Moreover, like 
Carey, Bowen uses this reasoning in support of pro- 
tection. 



158 THE RICARDIAN RENT THEORY 

There is but slight excuse for the error of those who 
claim that Professor Bowen denied the law of diminish- 
ing returns. His whole argument is founded upon the 
principle of this law as applied to a limited area. His 
problem is how to avert its evil consequences by a better 
distribution of population. 

The next chapter will be devoted to John Bascom 
and Amasa Walker: we shall find that, although these 
authors did not follow closely in the lead of Bowen, 
they were profoundly influenced by his writings. 



CHAPTER VIII 
JOHN BASCOM AND AMASA WALKER 

WHEN Bascom and Amasa Walker wrote/ 
the old problems which had inspired earlier 
economic writings in America had largely 
disappeared. A liberal reform of the tariff had long 
since been accomplished; the establishment of the sub- 
treasury was a thing of the past; and the publication of 
J. S. Mill's Political Economy had seemingly set at rest 
all economic differences by monopolizing the choicest 
thought, style, and method of the science. Slavery and 
great sectional issues had become paramount questions. 
This was a period of transition in which the classical 
school acquired greater prestige. 

John Bascom (1827-1911) was born at Geneva, New 
York. He was the son and grandson of clergymen, 
and a descendant on both sides of old New England 
families among whom were many men of influence and 
distinction. x'Vt the age of twenty-two, he was gradu- 
ated at Williams College. Then he studied law for a 
year, attended Auburn Theological Seminary, tutored 
for a time at Williams, and was graduated at Andover 
Theological Seminary in 1855. During the next nine- 
teen years, he taught English at Williams College. From 
1874 to 1887, he was President of the University of 
Wisconsin. After leaving Wisconsin, he lectured on 
sociology for a period of four years at Williams. On 
the retirement of his life-long friend, Professor A. L. 

^ Bascom's economics appeared in 1859 and Walker's in 1366. 



l6o THE RICARDIAN RENT THEORY 

Perry, in 1891, he became Professor of Political Econ- 
omy at Williams and held the place for ten years. In 
1903, after forty-eight years of service as college teacher 
and executive, he resigned. The remainder of his life 
was given to writing and to public service. Between 
1859 and 1901, he was the author of twenty-two books.^ 

We have seen that the training, experience, and in- 
terests of Bascom were in fields other than economics. 
In fact, among our earlier professors who taught eco- 
nomics, it was not considered necessary to acquire sys- 
temic knowledge in this subject. ^ His life was devoted 
largely to theology and philosophy, and his environment 
was the classroom and the library rather than the indus- 
trial world. 

He defines economics as the science which treats of 
values. * By "value," he means purchasing power ; con- 
sequently economics is the science which treats of pur- 
chasing power. ^ From this definition, logic would com- 
pel him to emphasize the problem of distribution, where- 
as, in reality, his book contains a theory of prosperity 
rather than a theory of distribution. 

With some modifications, Bascom would accept the 
theory of Malthus on population. He said, "Malthus 
made an important contribution to the science, b)?' a 
more enlarged discussion of population and its relation 

^ His books include: (a) Political Economy (1859); (b) Aesthetics 
(1862) ; (c) Philosophy of Rhetoric (1865) ; (d) Principles of Psj/chology 
(1869); (e) Science, Philosophy, and Religion (1871); (f) Philosophy 
and English Literature (1874); (g) A Philosophy of Religion (1876); 
(h) Comparative Psychology (1878); (i) Ethics (1879); (j) Natural 
Theology (1880); (k) Science of Mind (1881); (1) The Words of 
Christ (1884); (m) Problems in Philosophy (1885); (n) Sociology 
(1887); (o) The New Theology (1891); (p) Historical Interpretation 
of Philosophy (1893); (q) Social Theory (1895). See: A Memorial serv- 
ice in honor of John Bascom. at the University of Wisconsin, Madison, 
1911; Lamb's Biographical Dictionary, 1, 217, Boston, 1900. 

*Haney, History of Economic Thought^ 515. See also A. Walker, The 
Science of Wealth, 2d ed., VII. 

* Bascom, Social Theory, 119. 

6/6. 



JOHN BASCOM i6i 

to food; though his statements, as is natural with one 
bringing forward a new principle, were one-sided and 
extreme, demanding the correction of later authors." ^ 
His reasoning on population may be briefly presented 
as follows : 

(a) The human species is capable of indefinite mul- 
tiplication. Labor has no limits within itself. Popula- 
tion tends to double itself in twenty-five years, as a 
result of the intrinsic productive power of man. " 

(b) Land is limited in amount; from it comes food; 
therefore, the population is restricted by the limitation 
of the earth's productive capacity. Population is an 
unlimited and immeasurable force dealing with limited 
and measurable quantities. "Let the boundary be placed 
where it may, and such a force will find it. The capacity 
of the globe is this boundary." ^ 

(c) The limits of population are always determined 
by the status quo of the people, by their location, knowl- 
edge, and habits. It matters not that the earth could 
produce more. Pressure is present when the limit of 
the food supply under existing conditions is reached. 

(d) This state of pressure is reached soonest where 
civilization is at the lowest ebb. 

(e) This state may be, and has again and again been 
reached when the population was sparse. 

(f) The universal tendency is for population to out- 
strip the means of subsistence. ® 

Bascom recognizes the limiting forces of both the pos- 
itive and negative checks to population. ^^ He bases the 
whole problem upon the limitations to agriculture. Brief- 
ly, his reasoning is that population is Hmited by capital; 

* Bascom, Political Economy, 17. 
7/6., 118. 
8/6., 119. 
»/b., 121-122. 
10/6., 125, 126. 



1 62 THE RICARDIAN RENT THEORY 

but capital is limited by agriculture; therefore popula- 
tion is limited by agriculture. " 

Regarding rent Bascom tells us that, "It is the de- 
ductive force of the law, not its historic force, that im- 
presses the mind." ^^ "It has been the rare exception, 
taking human history collectively, that the law of 
Ricardo has been found governing the values of land." ^^ 
This law has been a most complex social problem, "not 
because of any complexity in the law, but because of its 
ineffectiveness." ^* 

He teaches that rent is the product of natural agents, 
which are of two classes : those productive of material, 
and those productive of power. Land is the chief agent 
of the first class. He says that the value of land as a 
productive power depends on two things : its fertility 
and its location. The latter is more important in deter- 
mining the value of land. Distance and difficulty of 
approach may overcome the advantage of greatest fer- 
tility. Land serves two purposes : positions for buildings 
and arable surfaces. The former use gives value to only 
a small portion of the earth, while the latter use gives 
value to a large portion of the earth's surface. In this 
latter use, however, both location and fertility are com- 
bined. ^^ 

Our author approaches the problem of rent from the 
side of price rather than of the marginal land under 
cultivation. He 5ays, "Rent and the cultivation of the 
poorest grade of soil are both effects of the same cause, 
the rise of value in produce." ^^ Taking the postulate 
that there is but one price for produce in the same mar- 

"/6., 127. 

'^" Bascom, Social Theory, 123. 

^3 lb. 

^^Jh., 1. 

1^ Bascom, Political Economy, 35-36. 

^^ Bascom, Social Theory, 121. 



JOHN BASCOM 163 

ket, he says that the differential advantage accruing to 
the landlord who holds superior grades of land (superior 
in both location and fertility) is known as rent. He 
says, "Difference of opportunity is the sole basis of 
rent; he who is in possession of the higher opportunity 
demands for it a recompense. This difference arises 
both from the limited amount of original gifts and from 
the variety in their intrinsic worth, in their fertility and 
position. This elasticity of tillage, by which it gives 
way, but with increasing difficulty, before advancing 
population, is the brake by which the motion of the train 
is regulated, is the rubber bed by which its movement 
is made pleasant and safe." ^^ 

Bascom holds, as did Ricardo, that rent arises from 
two causes : the limited supply of natural agents ^® and 
the difference in productive power which exists between 
them. ^^ He concludes, however, that differences in 
soil are only a measure of rent rather than a cause of 
rent. If the problem of rent be approached either from 
the cost of production under the most unfavorable cir- 
cumstances or from the price of produce on the market, 
differences in soil appear only as a measure, and not 
as a cause of rent. But if differences in soil are only 
a measure and not a cause of rent, it follows, contrary 
to Ricardo's thought, that rent would exist were all 
soils of the same quality. Rent, then, would find its 
sole origin in the limited capacity of the earth to pro- 
duce commodities. This thought, logically speaking, 
makes the law of supply and demand the cause of rent. 
That the law of supply and demand is the cause of rent, 
in Bascom's reasoning, is put beyond debate when he 
denies Ricardo's fallacy of inversion and teaches that 

" BascoTTi. Political Economy, 154-155. Quotation from 155. 
«/&., 153. 
^Ih., 156. 



l64 THE RICARDIAN RENT THEORY 

the price determines the lowest margin of cultivation 
rather than that the lowest margin of cultivation deter- 
mines the price. 

Bascom finds a limit to the supply of produce in the 
law of diminishing returns (proportionality). Conse- 
quently, it is because of this law that rent exists. He 
says, "On the supposition of equal advantages in the 
various soils, it is the decreasing returns, which, land 
being all occupied, shortly begin to be made to all addi- 
tions of effort, that occasion rent." Double or quadruple 
the labor, and crops will not proportionately increase. "" 
Returns refer to produce rather than to value. Under 
static conditions, returns, after a certain point, diminish 
per unit of expenditure upon a given area. Though 
the limit to returns is never reached, yet the increasing 
resistance encountered in intensive cultivation leads to 
the occupation of new soils. Extensive cultivation is 
opposed by such causes as inferior soils, greater distance 
from markets, transfer of tools, and the like. So, while 
the resistance in intensive cultivation leads to extensive 
cultivation, the difficulties of extension lead back to 
intensive cultivation. The result is, that the margins 
of extensive and intensive cultivation tend to produce 
equal profits to capital. -^ 

Bascom had not conceived the distinction between 
static and historical diminishing returns. In keeping 
with the Ricardian school, he holds to a static condition 
in agriculture and to a dynamic condition in the case of 
manufactures. Adhering to an instrumental concept of 
capital, he says, "The returns of labor employed in any 
manufacture tend to increase by an increment greater 
than that due to the increment of labor. This proposi- 

™ Bascom, Political Economy, 153. 
^Ib., 27-29. 



AMASA WALKER 165 

tion we state in connection with capital, as capital is 
the soil of this kind of labor. The increase in the returns 
of mechanical, as opposed to agricultural labor, is chiefly- 
due to two things : the ever enlarging career of inven- 
tion and the accumulative power of capital. 
In the processes of the arts, no state is ultimate, but the 
same powers which secured the present give promise of 
something beyond it." -- 

When Bascom wrote, there was need for a larger 
population relative to our natural resources. An in- 
crease of numbers meant an increase of national pros- 
perity. The harnessing of new lands, the better utiliza- 
tion of old lands, improvements in scientific methods, 
in seeds, fertilization, transportation facilities, and the 
division of labor, together with superior marketing facil- 
ities, were dynamic forces in agriculture. So powerful 
were these forces in agriculture at that time that it is 
strange that an American economist should think of 
diminishing returns for agriculture and of increasing 
returns for manufactures. The reason is, in the writer's 
judgment, that Professor Bascom was influenced more 
by the prevailing, the English, economics than by the 
industrial conditions of his country. 

Turning from Bascom, the professor, to his friend 
Amasa Walker, the statesman and business man, we find 
an economics more in harmony with industrial demands. 
Bascom's subtle work follows the classical economists 
and reflects the academic environment. Walker's book 
is little more than a comprehensive treatise of money 
and finance; it considers political economy as "emphati- 
cally a business science." ^^ 

^2 Bascom, Political Economy, 11. 

^ Walker, A., Science of Wealth, Pref., vi. 



l66 THE RICARDIAN RENT THEORY 

A brief presentation of Walker's career will account^ 
at least in part, for the nature of his work. Amasa 
Walker^* (1799- 1875) was born at Woodstock, Con- 
necticut. He was always feeble and delicate, but a want 
of physical stamina had its recompense in the impulse 
given him to study and reflection, and, perhaps, in a 
higher capacity for intellectual enjoyment. He took the 
utmost advantage of the limited opportunities offered by 
the village schools, though feeble health deprived him 
of the benefits of a college education. "In the intervals 
between the public schools, the boy used to recite to 
the Rev. Dr. Snell, having among his fellow pupils 
William Cullen Bryant and Elijah Meade." ^^ 

Amasa Walker had some experience in teaching; he 
was a business man who achieved distinct success; in 
politics, he was a public spirited leader. His political 
career began in 1829 when he entered actively into the 
movement against Masonry, which culminated in the 
nomination of William Wirt for the presidency, in 1832. 
He was a strong anti-slavery advocate. He took an 
exceedingly active part in the Harrison campaign, "stren- 
uously advocating the establishment of the Sub-Treasury 
system, as it at present exists. For this he was sub- 
jected to a degree of obloquy which it would be diffi- 
cult to conceive." ^® As a result of his long-cherished 
anti-slavery convictions, he took an active part in the 
formation of the Free Soil Party in 1848. He was a 
member of the national convention which nominated 
Van Buren for the presidency. In the fall of that year, 
he was elected to the legislature in Massachusetts and 

"^Palgrave, 1899, III, 648-649. Int. Encyc. Amer. Biography, XI, 
438. Memoir of Hon. Amasa Walker, by F. A. Walker, Boston, 1888. 
Reprinted from New England nistorical and Genenlogical Register, Apr., 
1888. 

2" Walker, F. A., Memoir of A. Walker, 4. 

=«/&., 8. 



AMASA WALKER 167 

was a candidate for speaker of the House, represent- 
ing the Free Soil and Democratic factions. In 1849, 
he attended the International Peace Congress at Paris, 
and became one of its vice-presidents. In the fall of 
that year, he was elected to the Senate of his state. Two 
years later he was elected Secretary of State for Massa- 
chusetts, by the united Free Soil and Democratic vote. 
In 1853, he was a member of the convention for the revi- 
sion of the Constitution of his state. Finally his political 
career culminated in his election to Congress (1862), 
where his chief interest was devoted to questions of 
finance. 

Francis A. Walker said of his father, "In politics, Mr. 
Walker's history was as follows : he was brought up 
among Federalists; became a Jackson Democrat, on the 
issues of paper money, banking, and the sub-treasury; 
joined the Liberty party in 1844; helped to found the 
Free Soil party in 1848, and the Republican party in 
1856." "-' 

At the age of fifteen, he went into the mercantile busi- 
ness, first as an employee. "Probably no clerk was ever 
more diligent and faithful or had a higher sense of 
the importance of his work." -® Later he went into 
business for himself, and extended his business to large 
proportions. His great success and intelligent interest 
in the mercantile business determined largely the char- 
acter of his economic thought. His interest in economics 
centered on the medium of exchange. Like Ricardo, 
he was attracted to general economics through a study 
of finance. 

In 1854, he was influential in the founding of the 
North Brookfield Savings Bank, of which he was the 

'"lb., 14. 
28/6., 4. 



l68 THE RICARDIAN RENT THEORY 

first president. The following quotation from F. A. 
Walker regarding his father is significant : 

The year 1857 was one of great import to the life of Mr. 
Walker. Early in that year he began the publication, in Hunt's 
Merchants' Magazine, of a series of articles on political econ- 
omy. The series had already progressed so far as to give Mr. 
Walker's views on money, when the financial panic of 1857 
commenced. Almost by chance, Mr. Walker attended, early 
in October, a large meeting of the merchants of Boston, in- 
tended to fortify the banks of that city in their determination 
to maintain specie payments. At this meeting, Mr. Walker 
took the ground strongly that the banks could not possibly 
maintain specie payments for more than two weeks, and that 
it was desirable they should at once suspend, instead of caus- 
ing the failure of the best merchants of the city, as they must 
inevitably do, by refusing discounts in a vain attempt to save 
their own so-called honor. This speech created a great sensa- 
tion at the time, and gave rise to a heated discussion in the 
public press ; but the suspension, within twelve days, of every 
bank in Boston, after causing the failure of great numbers of 
the best mercantile houses, some of them worth millions of 
dollars, gave so striking a confirmation to Mr. Walker's views 
as to bring him into prominence as an authority on finance, 
and to cause him to be invited to write and lecture far beyond 
the limits of his time and strength. This episode may properly 
be considered the turning point in Mr. Walker's intellectual 
career. From this time till the day of his death, the subject 
of the currency remained the most absorbing of all which 
had previously engrossed his mind, and his interest increased 
with the passage of years. 

Late in 1857, Mr. Walker published a pamphlet on the Nature 
and Uses of Money, to which he added a History of the Wicka- 
boag Bank, a work which had a large circulation. Mr. Walker's 
views on money, as presented in this pamphlet, were essentially 
those of the so-called 'Currency School' of which Lord Over- 
stone, Col. Torrens, and Mr. George Warde Norman were the 
leaders in England; and of which Mr. Walker, Mr. William 
M. Gouge, and Mr. Condy Raguet became the best known writ- 
ers in the United States. ^9 

Mr. Walker's enthusiastic interest in railroad con- 
struction in 183s entitles him to be classed as a pioneer 
in the history of American railroads. He wrote and 
made speeches in behalf of extending railroads to the 

^ lb., 10-11. 



AMASA WALKER 169 

west. His writings gave rise to a public meeting in 
Boston which resulted in securing the stock of the West- 
ern Railroad. He became a director of this road in 
1837. Two years later, he visited St. Louis, and, in a 
convincing address, urged the citizens to take action for 
securing a railway connection with the East. So strongly 
did he have the mercantile viewpoint that he, in reality, 
made the railroad question a merchant's problem. The 
thesis of his western speech was that because of the 
difficulties of water transportation, "The merchant can- 
not depend on getting his goods promptly. 
This is a great evil — all are injured, many ruined by 
it. Goods purchased for the Fall sales do not get to 
the place of their destination until Spring. This occa- 
sions great loss and embarrassment to the trader, much 
disappointment and inconvenience to his customer." ^° 

How railroads would develop western lands, influence 
values and rents, distribute the population, cause the 
erection of cities, towns, and industries, Avere not em- 
phasized. F. A. Walker says, "At that time, Mr. 
Walker's suggestion that a man might yet go from 
Boston to St. Louis in five days, or less, and eat and 
sleep on the cars, created no little amusement." ^^ 

Mr. Walker's mercantile interests, his studies in ex- 
change and currency, his political affiliations and his 
opinion that, "economically, it Vv^ill ever remain true, 
that the government is best which governs least," ^^ 
these naturally led him to accept the principle of the 
freedom of trade. 

When Walker wrote his text, slavery was, and had 
been, the question of absorbing interest. With the earlier 
questions of the tariff, the sub-treasury, and others set- 

^ lb., 6-7, gives his reported remarts. 

31 /b., 8. 

32 Walker, A., The Science of Wealth, 92. 



170 



THE RICARDIAN RENT THEORY 



tied for the time being, and after the publication of 
Mill's work, the classical school came more into prom- 
inence. Another, and doubtless the strongest, influence 
that caused Walker to ally himself with the classical 
school was his study of Adam Smith and Ricardo. In 
1840-41, he went to Florida for his health, carrying with 
him the works of Adam Smith and Ricardo. This stay 
in Florida gave him opportunity for much reflection. 
In his work on general economics, his references are 
almost entirely to the classical economists. On questions 
other than finance, he refers only to George Opdyke of 
all the earlier American economists. But of the Eng- 
lish economists to whom he refers and with whom he 
evidences an acquaintanceship are Cairnes, Malthus, 
Ricardo, McCulloch, Fawcett, J. S. Mill, and Adam 
Smith. He also refers to Bastiat and Levi. He refers 
to Adam Smith far more than to other economists. He 
calls J. S. Mill the ablest of living writers, ^^ and com- 
pliments Bastiat quite as unreservedly. ^* 

Regarding population. Walker says that the glut, fam- 
ine, and death theories of Malthus have exhausted the 
direct horrors of the subject. He teaches that all "Brit- 
ish philosophy of population is perverted and diseased 
from its root." This philosophy comes out of social 
wrongs and false political institutions. It strives to 
apply, as a universal condition of human being, the 
miserable results of local misrule. ^^ 

He says, "The two postulates of Malthus are: (i) 
that subsistence is stationary or retrogressive; (2) that 
propagation is a constantly operating force, enlarging 
population in some assignable ratio. . . . — There 
are here three fallacies : ( i ) that subsistence is not pro- 

^Ih., pref., viii. 
3* 7b. 
^Ih., 452. 



AMASA WALKER 171 

gressive, (2) that population necessarily increases, (3) 
that, even if these were granted, there would exist be- 
tween them any such melancholy relation as is as- 
sumed." ^^ 

He maintains that, under wise and intelligent culture, 
the soil will grow more fertile, that mechanical advance- 
ment will free more labor from the industrial arts to 
go into agriculture, and that the possibilities of chemical 
discoveries and other aids to agriculture justify almost 
any degree of expectation for future increase. ^^ He 
claims that the forces opposing the growth of numbers 
are quite as strong as those encouraging such growth, 
that the same God is author of both positive and nega- 
tive forces, and that, consequently, they must be given 
equal weight in all calculations of human propagation.^^ 

Resorting to the usual American argument, he main- 
tains that rent is due not to the niggardliness of nature 
but to a faulty distribution : 

It is of no consequence whether Manchester or Birmingham 
can raise their own breadstufFs within their corporate limits, 
if they can create values which will lay all the markets of 
the world under contribution. ^^ . . . 

In England, bad laws, passed by class legislation ; oppressive 
institutions, the relics of feudalism ; onerous taxation, incurred 
by the senseless war system; and unjust monopolies, created 
for selfish purposes — have combined to cause the ignorance, 
poverty, and degradation of the people, and to make the benefi- 
cent agencies of reproduction a partial curse. The laborers 
of England suffer for the commonest necessaries of life, while 
England is the richest nation on the face of the globe. Unques- 
tionably, the value of the total production of English industry 
amounts to five times the value of the simple necessaries of 
life for her whole population. Now, if labor starves, is it 
the fault of nature? The density of population has nothing 
to do with it. It is because the common people have so little 
influence on the government ; because the land is held for the 
pleasures and dignity of the lordly few; and because the na- 
tional majority is borne down by a powerful, selfish, and grasp- 

3«/&., 452-453. ^'' lb., 453. 
38/&., 453-456. S9/&., 456. 



172 THE RICARDIAN RENT THEORY 

ing aristocracy. Though the people suffer, it is because of 
nothing in the extent or fertility of their soil. But for a com- 
plicated, legalized system of robbery and wrong, every man, 
woman, and child in the United Kingdom might be as well 
fed, clothed, and educated as are the inhabitants of the United 
States, and as much more so as England is today richer. Any 
man and any people that can create value can command sub- 
sistence in God's way. *° 

On the whole, Walker opposes Malthus at every point ; 
he accuses Malthus of shaping his theory to the local 
situation in England. Walker's theory is an American 
theory, in harmony with the public opinion of this coun- 
try previous to the Civil War. His point of view is 
that of the practical business man. When he wrote, our 
frontier still held out its promising opportunities. Pop- 
ulation was still the short factor in our industries, and 
capital was demanding a larger supply of labor. The 
theory that "a. larger population means abundance rather 
than scarcity" was true when Walker wrote. 

In my judgment, Walker criticised a book which he 
had never read when he opposed Malthus. He gives no 
citations to indicate that he had read Malthus' essay; he 
attempts a statement of Malthus' thesis in two postulates, 
and both of them are wrong; and he thinks he has 
answered Malthus whereas in reality he has only stated 
another point of view. 

In his discussion of population, I find little with which 
Malthus would not have readily agreed. He differs from 
Malthus, not in content, but in point of emphasis and 
viewpoint. Walker, like the national economists we 
have reviewed, was arguing a different question when 
he opposed Malthus. Malthus was arguing upon the 
basis of what is under the existing circumstances of a 
given time, or a given stage of human progress. Walker 

^ lb., 457. 



AMASA WALKER 173 

took the idealistic point of view, and attempted to paint 
what would be under future, more advanced, and supe- 
rior conditions. Two men, one with the static and the 
other with the dynamic point of view, may argue the 
same question of the pressure of population upon sub- 
sistence, and use precisely the same terms, and with 
pure reason and sound logic come to conclusions wholly 
dissimilar. It was not because our early economists 
were illogical that they failed to make a case against 
Malthus ; it was because their viewpoint was wholly dif- 
ferent that they failed to attack that which Malthus 
really taught. 

It is the accepted opinion that, although Amasa 
Walker denies Malthusianism, he accepts unreservedly 
the Ricardian theory of rent. We have just seen that 
his difference from Malthus was only a matter of empha- 
sizing particular phases of thought which would appeal 
to an American business man of his time, and that he 
said nothing derogatory to the real teachings of Malthus. 
Contrary to the accepted opinion, I find that he teaches 
a theory of rent widely different from that held by 
Ricardo. 

Walker defines rent as follows : "Rent is paid for 
the use of land and its appendages, which together are 
called real estate." *^ He is always careful to speak of 
rent as a payment by one person to another, whereas 
Ricardo often speaks of rent as the surplus accruing 
to the proprietor who tills his own soil. Walker says 
that natural powers confer no value. *^ "We have said 
that nature adds value to nothing. Though unceasingly 
at work for man, she receives no compensation. She 
creates utilities beyond computation, but does all gra- 

«/6., 294. 

*^Ih., 10, 12, 16. 



174 THE RICARDIAN RENT THEORY 

tuitously. Wind, water, and steam are most efficiently 
engaged in producing commodities necessary to the wel- 
fare of mankind; and the earth is unceasingly active 
to bring forth man's food in its many forms. Yet all 
is done without adding to the wealth of the world. The 
forces 'work for nothing,' and hence confer no value. 
. If we look to the fertility of the land, by far 
the greatest of all the natural forces engaged in pro- 
duction, we shall find that it confers no value." *^ But 
production consists in the creation of values ; ** there- 
fore, since land is non-productive, it follows that labor 
and capital produce all. *^ 

We are led to ask. What of the three productive 
agencies: land, labor, and capital? "Wealth includes 
all objects of value"; ^® land is an object of value; there- 
fore land is wealth. "All capital is wealth, but all wealth 
is not capital. . . . Wealth is as it is had; capital, 
as it is used." " But land is used wealth ; therefore, 
land is capital. Very unlike Ricardo, then, he classifies 
land as capital, *^ and speaks of fixed capital as yielding 
a rent. *^ Consequently, in his classification of pro- 
ductive agencies, there appear only two classes : capital 
and labor. ^° 

If land be capital, why not denominate that which 
is paid for the use of land interest rather than rent? 
He says, "Capital is loaned in two general forms: ist, 
when invested with a permanent character and having a 
fixed place, as houses, fields, etc., its compensation is 
called rent." ^^ When he speaks of "the man who owns 

«7b., 16-17. 

**7b., Bk. II, Chap. I. 

^Ib., 60. 

«/6., 7. 

*'Ib., 55. 

«/6., 57, 253. 

^Ib., 253-280. 

K>7&., 60. 

«/&., 253. 



AM AS A WALKER 175 

capital and receives his compensation for its use in the 
shape of rent,"^- our author has in mind fixed capital. 
He says, "Improvements, more or less permanent, are 
investments of capital in real estate, changing the in- 
come from the form of interest to that of rent." ^^ 

His thought may be briefly summarized as follows : 
productive agents consist of labor and capital; there are 
two classes of capital — circulating and fixed. The for- 
mer bears interest; the remuneration for the latter is 
denominated rent. Capital, however, is past labor hav- 
ing taken form ; ^* then, like Carey, he must argue that 
rent is paid for improvements on the land. ^^ So, unre- 
servedly to style Walker a disciple of Ricardo is at once 
fallacious. Ricardo, emphasizing the original and inde- 
structible qualities of the soil, teaches a pure land-rent 
concept; Walker, speaking of land as a free gift of 
nature from which "value is not derived," ^* emphasizes 
the capital-concept and teaches that rent is but a remun- 
eration for the use of fixed capital. 

Walker brings forward four elements of rent: loca- 
tion, difference of fertility, importations, and improve- 
ments more or less permanent. Location "grows out 
of the social conditions of man." ^'^ Assume that men 
live as isolated beings, and that there exists enough land 
for all, and that each part is equally productive, then 
rent could not exist. ®^ Once men are gathered into vil- 
lages and communities, however, rent quickly makes its 
appearance. ^® Natural differences aside, men prefer 

82/&., 280. 
53/6., 299. 
"/b., 19. 
^Ih., 294. 
'«/&., 295. 
^ lb., 296. 
58/6., 296-297. 
^ lb., 296. 



176 THE RICARDIAN RENT THEORY 

locations that are central respecting public buildings for 
the accommodation of all (schoolhouse, church, etc.). 
Points at which the population can most readily assemble, 
and which form the natural center of business or land- 
ing-places, or where warehouses are put up for the com- 
merce of the settlement, are factors that cause location 
to create a rental independent of all other considera- 
tions. ^° 

On the difference of fertility. Walker says, "Mr. 
Ricardo, we believe, first brought out this principle clear- 
ly in his Political Economy, London, 1819." ®^ He as- 
sumes four grades of land capable of producing forty, 
thirty, twenty, and ten bushels respectively, with the 
same labor. At first. No. i produces all the corn neces- 
sary and no rent accrues; when population so increases 
as to bring No. 2 under cultivation, then No, i will bear 
a rent of 10. Finally, when No. 4 comes under culti- 
vation, No. I bears 30, No. 2 bears 20, No. 3 bears 10, 
and No. 4 bears no rent. ^^ Walker fails to take cog- 
nizance of the fact that intensive cultivation must keep 
pace with extensive cultivation in order that equal profits 
may accrue to capital on extensive and intensive margins. 

Walker's third element of rent, importations, is but 
an application of the extensive cultivation argument. In 
the above example. No. 4 produced no rent; but if all 
the land in a country were occupied and freights had 
to be paid to import corn, then No. 4 would bear a rent 
equal to its differential advantage. ®^ 

His fourth element of rent, improvements, consists of 
durable investments in real estate. Fertilizing, drainage, 
deep ploughing, and the like are included. "For every 

^ lb., 296-297. See also Merchants' Magazine (1860), xlii, 306. 
<^Ib., 298 n. 
«2 76., 297-298. 
63i&.j 298. 



AM AS A WALKER 177 

such appliance, wisely made, a rent is received, supposed 
to be equivalent to the expenditure incurred." ®* Note 
the difference here between Walker and Ricardo. Ri- 
cardo insists that what Walker here denominates rent 
is not rent, but profits on capital. Walker, however, 
centers his whole discussion of rent upon this point. ®^ 

It is strange that Walker should be called a disciple 
of Ricardo on the rent problem. Walker's definition 
makes rent a payment for fixed capital and never a pay- 
ment for the use of land as such; Ricardo's definition 
was the exact opposite. Walker always makes rent a 
payment by one person to another, Ricardo speaks of 
rent as a usance at times, and as a price at times. Walker 
thinks the rent-problem is of little importance. The 
exact opposite is Ricardo's view. Walker's emphasis 
is upon city rents, while Ricardo reasons almost wholly 
on farmers' rents. Walker thinks that land yields rent 
because of the expenditure upon its improvement. 
Ricardo considers land ready for the plough. Walker 
attempted a denial of Malthusianism ; this theory was 
an essential element in Ricardo's rent doctrine. Walker 
treated diminishing returns not at all, nor did he even 
hint at intensive cultivation. Ricardo's theory of rent 
was a deduction from the law of diminishing returns, 
and his emphasis was equally strong on extensive and 
intensive cultivation. The one classifies land as capital; 
the other condemns strongly such a classification. Their 
views, therefore, are more antithetical than identical. 

In this chapter, we have found that John Bascom, 
the college professor who was devoted to theology and 
philosophy, acquired his knowledge and bent in eco- 
nomics from the classical texts rather than from a touch 

85 /b., Bk. IV, Chap. VII. 



178 THE RICARDIAN RENT THEORY 

with practical affairs. His thought was in accord with 
the Malthusian theory of population. He looked upon 
the law of diminishing returns as applicable only to agri- 
culture, whereas a law of increasing returns ruled in 
the field of manufacture. To this as well as to the form 
of expression, the English economists would not object. 
But he departed from Ricardo when he taught that the 
price of the product determines the margin, thus making 
differences in soil no more than a measure of rent. He 
concluded, logically, that, if all soil were of equal quality, 
rent would exist. 

Unlike Bascom, we have found that Amasa Walker 
was a practical business man who was denied a college 
education because of poor health. He objected to Mal- 
thusianism, regarded land as capital, and at times spoke 
of fixed capital as earning rent. Some economists have 
classified Walker as a disciple of Ricardo; but this 
was an error from the fact that the form of his expres- 
sion was mistaken for the substance of his teaching. 
The next chapter will review the writings of A. L,. Perry 
who undertook a somewhat wider departure from the 
English economists than did either of the authors re- 
viewed in this chapter. 



CHAPTER IX 
ARTHUR L. PERRY 

PROFESSOR A. L. PERRY^ (1830-1905) was 
educated at Williams College and taught Politi- 
cal Economy at the same institution. He was 
a frequent contributor to The Springfield Republican 
and to The New York Evening Post. ' His important 
economic writings consist of two texts : Political Econ- 
omy (New York, 1865) and The Introduction to Politi- 
cal Economy (1877). He delivered numerous lectures 
in defense of the freedom of trade, ^ and carried on a 
series of debates with Horace Greeley in opposition to 
protection. 

The works of Perry, like those of Bascom, Bowen, 
and Amasa Walker, appeared at a period when this 
science was at a low ebb. His work was written for 
the classroom. No great national problem called it into 
existence; rather his book was the product of a closet 
philosopher, and such products are as likely to appear 
out of season as in. Perry was an open-minded man, 
who, without prejudice and with a thirst for knowledge, 
read broadly. He acted upon the principle that the 
teacher must ever be a learner, simple and humble and 
sincere. His was one of the most popular texts that 
has appeared on this side of the Atlantic and the secret 
of its success was its simplicity. 

He was one of the best equipped economists that 
America produced previous to 1885. His training in 

^ Appleton's Encyc. Amer. Biog., IV, 734. 
'^Outloolc, July 22, 1905, LXXX, 703-704. 
« Ida M. Tarbell in American Magazine, LXIII, 476, LXIV, 175. 



l8o THE RICARDIAN RENT THEORY 

economics was far superior to that of Bowen or Bascom. 
But whereas Bowen often lost sight of fundamentals in 
his labyrinth of details, Perry leaned strongly in the op- 
posite direction. He frequently failed to harmonize his 
general thought with the industrial facts of life, and 
often classified together things somewhat unlike in na- 
ture. This is the chief criticism to be made of Perry. 
The year 1863 was a turning point in Perry's eco- 
nomic thought. Previous to that date "for ten or twelve 
years he had been retailing the usual doctrines of Smith, 
Ricardo, Senior, and Mill." * Perry says : 

Almost from the outset of my studies, however, and increas- 
ingly as the years went by, I kept asking myself, "What is 
Political Economy about?" "Within what precise field do its 
inquiries lie?" "Is it possible clearly and simply to circumscribe 
that field?" I could see no solid reason why economical dis- 
cussions should be confined to tangible commodities, and not 
include as well personal services rendered for pay, and also 
credits of all kinds. I could not gain from the general terms 
used by the writers a firm conception of the science as includ- 
ing these three classes of things. The word "Wealth," which 
figured so largely in all the books, gave no satisfaction in this 
regard, for this best of reasons, that I never could gain with 
all my strivings a clear and generalized conception of just 
what that word covered. I found besides that no two of the 
writers had the same notion of the meaning of that word, and 
that no one of them all had given an adequate and self-con- 
sistent definition of it. I talked this matter over repeatedly with 
Professor Bascom, at that time my colleague and always my 
friend, and suggested to him a way of egress from the diffi^ 
culty; and my mind had almost reached the conclusion in which 
it has now rested for many years with perfect composure, when 
my late friend, Amasa Walker, who was even then a political 
economist of reputation, though he had not yet published his 
Science of Wealth, recommended to me Bastiat's Harmonies 
of Political Economy. I had scarcely read a dozen pages in 
that remarkable book, when the field of the science, in all its 
outlines and landmarks, lay before my mind just as it does 
to-day. I do not know how much I brought to that result, 
and how much towards It was derived from Bastlat. I only 
know that, from that time. Political Economy has been to me 

^MacLeod, The History of Economics, 154. 



ARTHUR L. PERRY i8i 

a new science; and that I experienced then and thereafter a 
sense of having found something, and the cognate sense of 
having something of my own to say. ^ 

Our author acknowledges his indebtedness to Bastiat. 
On land rent, his discussion shows close similarity to 
that of Bastiat. But he goes farther than Bastiat and 
entirely abandons the use of the word wealth as a scien- 
tific term. "The most," he says, "of what is original 
in my book is an immediate or else an indirect result 
of absolutely dropping from the start the use of the 
word 'wealth' as a technical term. So far as I know, 
I was the very first economist to do this." ^ 

He defines a science as a "body of exact definitions 
and sound principles educed from and applied to a single 
class of facts or phenomena." ^ 

Political economy, in his thinking, is the science which 
addresses itself to that circumscribed class of facts or 
phenomena of which value is the characteristic. ' 

We place the field of the science just where Whately places 
it, — "Catallactics, or the science of exchanges" ; just where the 
continental Kiehl puts it, — "Die Lehre von den Werthen," The 
doctrine of values; and just where MacLeod locates it, though 
we do not like the term "quantities" in this connection, — "The 
Science which treats of the laws which govern the relations of 
exchangeable quantities." Any one of the three following defi- 
nitions, which are the precise equivalents of each other, namely, 
the science of Sales, the science of Exchanges, the science of 
Value, gives a perfectly definite field to Political Economy. We 
shall use the three interchangeably, though for the present 
emphasizing the last. ^ 

By value. Perry means "the relation of mutual pur- 
chase established between two services." ^^ He says, 
"Two persons, two things, two desires, two efforts, two 

^ Perry, Political Economy, viii-ix, introduction 
oib.,x. ■^ lb., 89. ^ lb., 112-115. 
»Ib., 112-113. lo/ib., 131. 



l82 THE RICARDIAN RENT THEORY 

estimates, and two satisfactions, form the circle of 
value." ^^ "Value," he says, "is the sole subject of our 
science. . . . While value always takes its rise in 
the desires of men, it is never realized except through 
the efforts of men, and through these efforts as mutually 
exchanged." ^- 

Having considered his training, his dissent from cer- 
tain classical views, his idea of the scope and definition 
of the science, we are prepared to follow his peculiar 
teaching on the population-rent problem. 

The population problem receives little attention at the 
hands of Perry. He says, "Malthusianism, as it has 
been called, is really a topic of Physiology and not of 
Political Economy at all. Political Economy presup- 
poses the existence of persons able and willing to make 
exchanges, before it begins its inquiries and generaliza- 
tions. How they came into existence, the rate of their 
natural increase, and the ratio of this increase to the 
increase of food, however interesting as physiological 
questions, have clearly nothing to do with our science." ^^ 

He satisfies himself with a very brief and inadequate 
statement of the Malthusian doctrine, ^* and then gives 
briefly his reasons for dissent. Time and again, in our 
review of the earlier American economists, we have met 
the arguments he uses to refute this doctrine. 

(a) Population draws not only upon the soil it occu- 
pies, but upon the world at large for its support. ^^ 

(b) Moral and religious training brings men under 
the influence of reason and affection, and under this 
influence preventive checks silently and effectually be- 
come operative. ^® 

"7&., 164. ^Ib., 165. 

^ n., 238. "7b., 238-239. 

^5/b., 239. "7&. 



ARTHUR L. PERRY 183 

(c) The history of the world shows that food and 
comforts have more than kept pace with the growth of 
population. ^^ 

(d) "He who is the author of the laws is author also 
of natural counter-workings of them, so that a particular 
tendency towards their coming into conflict is confidently 
denied." ^^ 

(e) Each consumer is also a producer. " 

(f) "The famines of the world have been caused 
more by the indolence and want of foresight of indi- 
viduals, and by the maladministrations of governments, 
than by the law of population." ^° 

Perry, at the outset of his discussion on land, points 
out the vast difference between land as a physical thing 
and land as a valuable thing. '^ The former is God's 
free bounty; the latter is produced through human ef- 
forts. The "original utility" — the utility of the land as 
God gave it to us — always remains a free good. No 
bounty of God is intercepted, through exclusive appro- 
priations by man, in its descent to mankind as a whole. ^^ 
What men receive gratuitously, they must gratuitously 
transmit. This principle still holds true after all the 
land has been taken up. ^^ "Human motives are such, 
and everything is so providentially arranged, that men 
cannot, as a rule, sell God's gifts ; it would be derogatory 
to the Giver, if they could." -* He further says, "As a 
matter of fact and experience, lands are absolutely value- 
less until some portion of human effort has been ex- 
pended on them, or in reference to them." ^^ He argues 

^Ih., 239. 
M/&., 239-240. 
2»7b., 240. 
»/6., 276. 
227b., 276-8. 
2»/b., 278. 
2*/b., 279. 
»/6., 279. 



l84 THE RICARDIAN RENT THEORY 

that the value of our government lands is due to human 
effort, due to the facts that they have been surveyed, 
that local governments have been provided for settlers, 
and that mail facilities and other privileges have been 
guaranteed to them. ^^ 

It is not, then, the ''original utility" for which we pay ; 
rather it is the "new utility," or the utility added to the 
land by means of human effort, that commands a 
price. 2^ Now, if the value of land be due to labor, 
would it not follow that the value of lands would be 
in proportion to labor? No; Perry, like Carey, would 
reply that it is not the original cost of production but 
rather the cost of reproduction that determines value. 
He says : 

The progress of capital and Inventions enables similar work 
to be done now at greater advantage, and consequently the 
results of former work have fallen in value. While, therefore, 
value in land arises solely in connection with human efforts 
of some sort standing in some relation to that land, it is im- 
portant to observe that the value is not always proportioned 
to those efforts. The efforts may have been misdirected; the 
desires calculated upon may have taken another turn; the util- 
ity sought to be conferred may not find the requisite natural util- 
ity underneath; and so, there is a greater diversity in the value 
of lands than in the amount of efforts expended upon them. 28 

Like Carey, he makes saleable land a commodity for 
the same reason that a machine is a commodity: in the 
one case, the free bounty of nature, iron, is transformed 
by human effort into a machine; in the other case, the 
free bounty of nature, land, is transformed by human 
effort into valuable land. 

He makes some exceptions, which he terms unim- 
portant, to his theory of land-values. Unusual fertility, 

^ lb., 277. 
28 7&., 280. 



ARTHUR L. PERRY 185 

excellent locations, lands containing rich mines or water 
power, are the exceptions cited. Why cite these as ex- 
ceptions to his theory? 

Perry's is an exchange economy according to his own 
definition; service for service is the central concept in 
his system. His service-for-service doctrine, as he uses 
it, is but a crude application of the law of supply and 
demand. Perry did not thoroughly conceive the cost-of- 
reproduction doctrine which he borrowed from Carey, 
because Carey, who originated the cost-of -reproduction 
as a distinct theory of value, did not have in mind, when 
he used this idea, the amount of labor it would take to 
reproduce a waterfall, but rather the amount of value 
expressed in labor for which this waterfall would ex- 
change. In Carey's thought, the law was general. In 
Perry's thought, evidently it could refer only to freely 
reproducable goods. At any rate, if Perry regards these 
instances as exceptions to his law, it follows that he 
has no law; for differences in land respecting fertility 
and situation are characteristic of all lands. Differences 
in fertility or situation of saleable land is a matter of 
degree, not of kind. There exists no distinct line of 
demarcation separating lands in respect to their fertility 
or situation and placing them in different value-cate- 
gories. 

Perry, like Carey, classes land as capital. He says, 
"The largest part of all saleable land is nothing more or 
less than capital Capital is some product reserved as 
a means to further production ; and valuable land is 
always a product of labor and previous capital, and 
is generally reserved for use in future production, and 
so is capital under the definition." -^ He does not hold 
that all valuable land is capital, "but only that large 

»7b., 283. 



l86 THE RICARDIAN RENT THEORY 

portion of it that is worked or leased or held with a view 
to an ultimate profit." ^'^ He offers the following exam- 
ples of capital : factories and business premises, lands 
and buildings that are rented out, and farms cultivated 
by their owners or leased to tenants. He tells us that 
the following are not examples of capital : private houses 
occupied by their owners and lands kept for mere beauty 
or convenience. ^^ 

Thus he declares that a farm is capital whether used 
by its owner or let to a tenant, but a house used by 
its owner is not capital, whereas it is capital when leased 
to a tenant. Also lands held for convenience are not 
capital. Then it would seem that indirect agents are 
capital only when held for a commodity return. But 
this gets him into the further difficulty of harmonizing 
this into his exchange economy. He says that land leased 
to another is capital ; here money-rent is involved. This 
involves the erroneous admixture of a usance with the 
payment for that usance. Further, it will be remembered 
that Perry casts the word "wealth" out of his treatise. 
Now, if land held for convenience is not capital, what 
is it? He says land held for ultimate profit is capital 
while that held for convenience is not capital. Evidently 
land held for convenience may earn a profit in the form 
of unearned increment. At one time, Perry classifies 
an indirect agent as capital because of the motive in 
the mind of its owner; again he makes his classification 
on the basis of a profit-yield. Since Perry classified 
land as capital, he would, unlike Ricardo, find no dis- 
tinction between rent and interest; land rents and inter- 
est on a money loan would be governed by the same 
principles. Perry's words are : 

31/6., 284. 



ARTHUR L. PERRif 187 

The rent of leased lands is the measure of the service which 
the owner of the land thereby renders to the actual cultivator 
of it. . . . As land is capital, and as every form of capital 
may be loaned or rented, and thus become fruitful in the hands 
of another, . . . the rent of land does not differ essen- 
tially in its nature from the rent of buildings in cities, or from 
the interest of money. "- 

He emphatically denies Ricardo's claim that rent is 
a differential surplus, that cost under the most unfavor- 
able conditions determines rent, and that rent is a pay- 
ment for the use of the "original and indestructible pow- 
ers of the soil," for, says Perry, such powers do not 
exist. ^^ According to his view : 

The rent of lands is a simple recompense for the use of a 
productive instrument, made such by human efforts. . 
Because the owner practices abstinence in the lessee's behalf, 
rent is substantially the same as profits. . . . Whether till- 
able lands pay any rent at all, and the amoimt of rent that they 
pay, always depends, so far forth as commercial considerations 
control, on the general or average expected price, that is to say, 
value, of produce. It is not diversity of soils, nor the law of 
diminishing return, that causes rent, since these continue as 
before when rent ceases to be paid ; but it is the price of produce 
under demand and supply, that causes rent. 3* 

Perry is correct in the assertion that the law of dimin- 
ishing returns (proportionality) is still operative when 
particular lands cease to pay rent; but this is far from 
saying that diminishing returns do not cause rent. It 
would be a feeble analysis that would stop with the 
assertion that the price of produce causes rent. It sim- 
ply puts the true answer a step farther off. Produce 
would have no price except for its economic scarcity, 
that is, supply in relation to demand. The cause of eco- 
nomic scarcity is that of the resistance to be encountered 

S2/6., 288. 
9S/6., 291-2. 
"/&., 292. 



1 88 THE RICARDIAN RENT THEORY 

in production, or the law of proportionality. Were re- 
sistance absent, what of the price problem? 

If the "law of diminishing returns" is not a cause of 
rent, what would be its significance in Perry's analysis? 
He says, that the portion of the land that is capital must 
possess all the characteristics of capital, "among these, 
is the ability to wear out." ^^ His is strictly an instru- 
mental concept of capital; and he discusses at some 
length how "value disappears, and capital wears out." ^* 

He goes on to say : 

I£ the bulk of land be capital, as it is, then we might expect 
beforehand to find a law of diminishing return from land, agri- 
cultural labor and skill remaining the same ; because all capital 
is tools, and tools are always wearing out. Increase of labor 
in connection with any form of capital unimproved by new 
inventions and uninvigorated by fresh skill, though it may 
indeed increase the aggregate return, cannot, for the reason 
just given, secure an increase proportioned to the increase of 
the labor" 37 

The first sentence just quoted tells us that diminishing 
returns are due to the fact that capital wears out. In the 
history of economic thought, various concepts are de- 
nominated the law of diminishing returns, but none are 
wider from the mark than Perry's. Perry differs from 
Ricardo in that his concept is historical rather than 
static; he differs from Malthus regarding the manner 
in which historical diminishing returns are operative. 
The fact that tools wear out, is Perry's central thought ; 
the central thought in the argument of Malthus was, 
that, though the land improves, yet a more rapid increase 
in population would cause a diminution per capita. This 
statement also affirms that land is subject to diminish- 

^ Il>., 284. This is the first appearance of this crude concept in tMs 
study. 

S8/6., 284-5. 
ST 76., 285. 



ARTHUR L. PERRY 189 

ing returns because land is capital; thus Perry differs, it 
seems, from the classical writers who denied the appli- 
cation of this law to capital goods. The second sentence 
just quoted, though in opposition to the one immediately- 
preceding it, is a recognition of the universality of this 
law. It implies a static concept. The quotations pre- 
sent Perry's teaching on this point. From what has 
been said, it is clear that it is impossible to state pre- 
cisely what he means by the expression "the law of 
diminishing returns." We find, in his thought, the con- 
cepts of both static and dynamic diminishing returns. 
The return, in his thought, is at one time a value-return, 
and at another time he speaks of a commodity or weight- 
and-tale return. It seems clear that the subtler meaning 
of this law was absent from Perry's thought. 

In his famous speech, "The Foes of the Farmers," to 
the farmers of Nebraska, Perry said : 

The products of the farm are constantly becoming more valu- 
able relatively to the products of the factory. There are three 
reasons for this : first, machinery can be applied more com- 
pletely in manufactures than in agriculture; second, division 
of labor can be carried further in manufactures than in agri- 
culture ; and, third, nothing can hasten the time during which 
the fruits of the earth mature, while the processes of manufac- 
ture can all be hu/ried up. The result Is the price of raw 
material tends to approach the price of finished products. This 
one law of Political Economy is the physical law of Progress 
for the masses. ^® 

The thesis of this address was that the results of the 
law of diminishing returns are more readily realized in 
agriculture than in other pursuits, and that agricultural 
conditions are, for the three reasons given, comparatively 
more static. In this speech, no denial is made of the 
general application of this law, but rather it is shown 

^ Perry, The Foes of the Farmers, 6. 



190 THE RICARDIAN RENT THEORY 

how, through dynamic changes, new conditions arise 
more readily in manufactures than in agricukure. Thus, 
while the general application of proportionality is recog- 
nized, our author does not fail to observe that the ulti- 
mate cause of scarcity-values is the comparative resist- 
ance experienced in securing returns from different 
factors. 

This chapter illustrates the danger of departing from 
the well trodden paths in the field of economics unless 
one is possessed of rare ability and a comprehensive 
grasp of the subject. Perry eliminated the word "wealth" 
and offered nothing in its place. He defined economics 
in terms of his fundamental concept — a mutual exchange 
of service for service. What of the exchange of goods 
whose fabrication is a secret? or whose amount is lim- 
ited by nature? or which, without labor, have grown 
through time to great value? or which are controlled by 
a monopoly? Furthermore, dwellings, parks, or roads 
which are not held for exchange or for a contractual 
return, do not come under his definition of value. They 
are ruled out of his economics. His treatment of land 
as capital was in keeping with the larger number of the 
economists under review. Although mistaken as to the 
meaning of the law of diminishing returns, he was cor- 
rect in maintaining that this law is applicable to all forms 
of productive agents. He made little use of this law 
for the reason that he did not comprehend its relation- 
ship to rent. The next chapter will end the study with 
a resume of the writings we have thus far reviewed. 



CHAPTER X 
RfiSUMfi 

WITH two exceptions, the early American 
economists who advocated the freedom of 
trade adhered, broadly speaking, to the Ri- 
cardian theory of rent. Protective tariff advocates, on 
the contrary, contested that theory. This is not strange. 
The tariff was a question of absorbing interest in this 
country; and the primary purpose of studying economics 
was to obtain a deeper insight into the tariff. The free- 
dom of trade was considered a logical deduction from 
Ricardo's theory of rent; and leading statesmen, as well 
as the economists, based the argument for the freedom 
of trade upon the Ricardian theory of rent. 

WEALTH 

We have found that these authors held different and 
conflicting definitions of wealth. Cardozo and the early 
nationalists would not limit wealth to things bought and 
sold. By "wealth," they meant the productive "capacity" 
of a nation. The American economists of the Classical 
School, would, on the whole, limit wealth to privately 
owned commodities. Wealth, according to the Carey 
School, is the power to control the always gratuitous 
services of nature — the control of man over nature. 
Bowen and Tucker would include in their definitions, 
immaterial as well as material products. Perry claimed 
it a contribution on his part to omit the word "wealth" 
from his economics. 



192 THE RICARDIAN RENT THEORY 

VAIvUE 

The economists Wayland, Vethake, Cooper, and the 
others following in the lead of Ricardo, accounted for 
value in terms of cost. But, with hardly an exception, 
they, in the body of their writings, made the law of sup- 
ply and demand (with emphasis on demand) the regu- 
lator of value. Vethake, Newman, Bascom, and even 
Bowen made the value of a good, in harmony with 
Adam Smith, depend upon either the amount of labor 
for which it could be exchanged or that went to pro- 
duce it. The Carey School held a cost-of-reproduction 
theory of value. George Tucker and Willard Phillips 
were surely the ablest exponents of the opinions held 
by the majority of the early American economists. They 
argued against the labor-cost theory of value, and lim- 
ited value to things, material or immaterial, subject to 
purchase and sale. They held persistently to the view 
that value is subjective and individualistic. This view 
was carried to its logical conclusion in maintaining that 
a commodity need not necessarily have utility in order 
that we attach value to it. Whether utilities be real 
or imaginary, it is enough that we think commodities 
have utilities for us to attach value to them. Phillips 
thinks that the desire to obtain any particular thing 
gives it its value, and the motives of such desires are 
as various and numerous as the appetites, tastes, pas- 
sions, wants, and caprices of mankind. As value is cre- 
ated by this desire, so it is limited by its strength and 
intensity. Tucker argues that value, in its largest sense, 
means the feeling with which we regard whatever can 
render us benefit, or afford us gratification. In this 
sense, it is an emotion of our minds comprehending all 
that can impart pleasure to our senses, our tastes, our 



RfiSUMfi 193 

desires : as health, talents, friendships, reputation, land, 
money, and goods. It varies according to the endless 
diversities of objects, and of human tastes or opinions, 
and it is susceptible of all degrees of intensity, from a 
simple wish to the most passionate desire. 

CAPITAL 

With few exceptions, we have found capital defined as 
privately owned means of production. The value rather 
than the technological concept has been emphasized. The 
value-aspect of capital has been accounted for in two 
ways : the scarcity of capital goods, and the earning 
power of such goods. The scarcity of capital has been 
accounted for by: scarcity of peculiar skill, secret pro- 
cesses, legal rights, the natural desire for present con- 
sumption, and the large cost required to produce some 
kinds of capital goods. These limiting agencies, it will 
be seen, form the basis for the quasi-rent doctrine which 
of late has come to the fore. In a number of instances, 
notably in Tucker's writings, the quasi-rent idea, though 
discussed under the terminology of profits, finds clear 
treatment. The writers, on the whole, think of the 
value of capital in terms of earning power. And, limit- 
ing the supply of land to improved land, it is notable 
that from Raymond to Perry inclusive, land has been 
regarded as one of the forms of capital. The reason 
for this view is to be found in the environment of the 
writers. In America were lacking the customs and ideas 
as to the capitalist and the landholding classes, originat- 
ing in the contrast between town life and country life 
in the Middle Ages. Here the lands were subject to 
frequent purchase and sale, farms were hewn out of 
the forest, free lands were converted into valuable pos- 



194 



THE RICARDIAN RENT THEORY 



sessions through internal improvements and the arts of 
husbandry, and changes relative to the market and varia- 
tions in yield were due to human agency. 

POPULATION 

At the very outset, the student of early American eco- 
nomics must appreciate the mal-adjustment of means to 
ends which then existed in this country for the pro- 
duction of wealth. To utilize the abundance of natural 
resources, labor and capital were in great demand. There 
were economic reasons for the wanton earth-butchery 
which characterized this period. A limitless breadth of 
arable land and a meager supply of labor and accumu- 
lated capital, were conditions that made land almost a 
free good and gave to labor a disproportionate value. 
Not the preservation of natural resources, but the best 
utilization of labor and capital, is the dictate of wisdom 
under such circumstances. 

The theories of population held by our economists 
were also in keeping with their environment. These 
theories may be grouped under the following titles : 

(i) The theory that faulty distribution is the origin 
of poverty. 

(2) The theological theory. 

(3) The theory of the adjustment of productive 
factors. 

The prevailing opinion was that poverty is due not 
to the niggardliness of nature but to faulty distribution. 
In 1847, the "fate of the Irish and Scotch appeared the 
more terrible because they starved in the midst of 
plenty." Raymond summarizes the prevailing opinion in 
these words : "It matters not how abundant food may 
be; if it all belongs to a small portion of the nation. 



RfiSUMfi 195 

and the rest of the nation has nothing to buy it with, 
a larger portion will be left to starve, unless some pro- 
vision is made by law for the distribution of it among 
the poor." It was by this defect and not by the niggard- 
liness of nature that these economists accounted for the 
poverty of England. They insisted that population is 
not supported on the soil it occupies. A civilized society 
is so constructed that this could not be. This principle 
was used to support the argument for a territorial divi- 
sion of labor, to deny the idea of the niggardliness of 
nature, and to support the advocacy of a large popula- 
tion to subdue the land and utilize its resources. 

The theological theory is a conspicuous element of 
American economic thovight. Contrary to Malthus, those 
holding this theory repeat the command to replenish 
the earth. Divine relationships, exemplified in physical 
and social laws, necessitate the division of labor and ex- 
changes. Perry, Cardozo, Bowen, and others seem to 
work out their theories of value on the proposition that 
"God is a giver and not a seller," and that, therefore, 
value originates not in what God has done but in what 
man has done. Procreation is governed by divine laws. 
The Author of the positive forces is also the Author 
of the negative forces; therefore numbers will be har- 
moniously adjusted to the resources of the earth, and 
man need not interpose his agency. God in his all- 
goodness will provide for the race, and will originate 
no laws forcing us to starve, as Malthus claims. If 
barbarian tribes waste away for want of food, this is 
but a beneficent arrangement of Providence whereby 
civilized peoples shall occupy the farthest corners of the 
earth. 

The ideal of a proper adjustment of productive factors 
became an argument for a larger population in America. 



196 THE RICARDIAN RENT THEORY 

Preaching the doctrine of historical increasing returns 
rather than historical diminishing returns, American 
economists felt the necessity for a large population in 
order to utilize the world's natural resources. Popula- 
tion is a cause of abundance rather than of scarcity. 
The division of labor with the consequent influences 
of invention and skill result from a large population 
and increase with the growth of numbers. Following 
in the lead of this dynamic progression, it is found that 
man's desires mount with every additional opportunity 
for gratification. The growth of desires in the direction 
of great variety and superior quality of products neces- 
sarily brings into utilization still further productive 
energy. But what is the limit of this dynamic progres- 
sion? It will cease when the population factor of pro- 
duction becomes proportionately as great as are the other 
factors of production. Bowen taught that, in sparsely 
settled regions, children are a blessing to parents and 
not a burden, but that, with the increase of numbers, 
the birth rate will decline. Tucker proved by the statis- 
tical method that the density and the rate of increase 
of population vary in inverse ratios. When the earth 
is duly populated, numbers will remain stationary. Car- 
dozo, Wayland, Phillips, and Walker believed that pop- 
ulation always adjusts itself to the existing state of 
industrial development. The Carey School, following 
in the lead of Herbert Spencer, maintained that man's 
cerebral and reproductive functions became antagonistic 
through development. Over-population will be avoided 
because the power to maintain life varies inversely with 
the power to propagate the species. The conclusion of 
these teachings is, that the forces destructive of popula- 
tion and the forces preservative of it tend toward equili- 



RfiSUMfi 197 

brium. The ultimate check of population is a harmoni- 
ous adjustment of all the factors of production. 

The phrase "population problem" has been employed 
in a number of different senses. It has been used to 
signify the relationship between the birth rate and the 
death rate, increasing density, poverty, the mal-distribu- 
tion of numbers over the earth or in the different fields 
of employment, a faulty distribution of wealth, and 
problems caused from immigration. From different defi- 
nitions, unlike conclusions may be logically advanced. To 
advance one line of argument is not always to deny 
the correctness of another line of reasoning. The essen- 
tial thought of Malthusianism was not necessarily denied 
by our economists who preached that increasing numbers 
meant increasing prosperity under the then existing con- 
ditions in America. Because land was the short factor 
in England and population the short factor in America, 
it might well follow that what would be a truth in Eng- 
land would be an untruth in America. In both countries, 
however, the problem was one of adjusting the popula- 
tion to economic environment. 

RENT 

Ricardo's doctrine of rent was thought by American 
writers to be inapplicable to this country. They claimed 
that this theory was invented to suit the conditions of 
England. It could not hold in the United States because 
we had no distinct class supported by wages, and be- 
cause a growth of population here caused increasing 
returns and lower prices. 

It is worth while to review a few of the criticisms 
made by American writers upon Ricardo's rent-doctrine. 
The origin of rent is not found in the different qualities 



198 THE RICARDIAN RENT THEORY 

of soil but in the scarcity of soil suited to different kinds 
of crops. All lands under cultivation pay a rent because 
they are valuable. There are no original and indestructi- 
ble qualities of the soil. Like machinery, agricultural 
lands are products of labor. Society is so organized 
that one industry aids other industries; therefore the 
interests of classes are not antagonistic in nature. 
Ricardo's theory is a fallacy of inversion : the poorest 
land brought under cultivation does not determine price, 
but price determines the poorest land that will be brought 
under cultivation. The order of cultivation is from poor 
land to rich and not from rich to poor as Ricardo 
teaches. Demands for produce increase more rapidly 
than do improvements in husbandry; therefore improve- 
ments augment, rather than lower rent. American econ- 
omists for the most part abandoned the threefold classi- 
fication of productive factors. Land was considered a 
form of capital. They had varying definitions of capital, 
yet the value of land and its uses were treated by the 
same principles that regulate the value of artificial agents 
and their uses. 

The prevailing view of American economists was that 
rent is governed by the law of supply and demand. The 
price paid for the services of land is determined by 
the same principles that fix the market prices of goods. 
There was a great difference between Ricardo and his 
American critics in their analyses of rent-determining 
forces. Ricardo reasoned as if men were equal and as 
if they were creatures of circumstances. Our economists 
recognized variations in the efficiency of competitors, 
and reasoned that environment is largely a human crea- 
tion. Ricardo's formula was based on the idea that 
rent is determined and measured by natural laws. Em- 
phasizing the human agency, some American writers 



RfiSUMfi 



199 



spoke of agricultural returns as products of labor, and 
argued that contract rent results, as other market prices, 
from competition among men of unequal strength. A 
number of these writers. Cooper in particular, so empha- 
sized differences in men as clearly to suggest Walker's 
differential theory of profits. 

Accurate terminology and clear thinking made it a 
matter of significance whether rent is defined as a net 
return or defined as a price paid for the use of indirect 
agents. These concepts obey different principles. Net 
returns to the farmer who tills his own soil is usance 
and not rent. The price paid for the use of land is rent. 
The one is legal or contractual in nature and does not 
vary during the contract period; the other is a problem 
in production involving the risks of seasons, pests, labor 
conditions, distributive costs, and market prices. Ameri- 
can economists overlooked this distinction although the 
weight of their emphasis was on the idea that rent is a 
contract payment. 

Their distinction between rent and interest was only 
in name. Prices paid for the use of land and prices 
paid for the use of capital are fixed by the same laws. 
Many of these authors spoke of rent as a per cent, and 
reasoned that the value of land is determined through 
the price of its yield. Adhering to the principle of com- 
petition, they argued that the price of land as determined 
by the value of its rental could be measured by the 
cost of reproduction. The Carey School makes the 
cost of reproduction a measure and not a cause of value. 

On the whole, the early American economists pre- 
sented the problem of returns from the dynamic point 
of view. They did not reason with respect to the returns 
of a limited area at a given stage of industrial develop- 
ment. They surveyed the whole industry over a long 



200 THE RICARDIAN RENT THEORY 

period of time. Changes through time such as develop- 
ments in the arts and in science, substitutions, superior 
organizations, and the hke, form a basis of reasoning 
entirely different from the static situation usually as- 
sumed by Ricardo. History substantiates the truth of 
their contention that the principle of historical increas- 
ing returns is applicable both to agriculture and to manu- 
facturing. To affirm dynamic increasing returns is in 
no sense to deny static diminishing returns (proportion- 
ality). We have seen that the method of reasoning used 
by our economists took for granted and affirmed the 
static law in the sense in which Ricardo mainly used it. 

To avoid reading new trains of thought into these 
writings, I shall assume responsibility for the following 
remarks although their substance is deduced from the 
preceding pages. Many of these writings contain by 
implication the principle that the supply of land is meas- 
ured in yield rather than in area. An acre yielding loo 
is as great a part of the land-supply as are ten acres 
whose total yield is lOO. The land-power to do the 
land- work is the supply of land just as the money-power 
to do the money-work is the supply of money. The 
land-supply is increased by new discovery of land, by 
the better utilization of land, by the increase of trans- 
portation facilities that make new lands available, by 
scientific methods, or the substitution of rich for poor 
lands, by intensive or extensive utilization, or by any 
means which convert potential into effective uses. Clear 
thinking demands that we distinguish between "the 
amount of land" and the "supply of land." 

Whether on old or on new lands, additional uses resist 
being harnessed. Resistance must be overcome in the 
obtaining of additional uses from any productive agent. 



RfiSUMfi 20I 

The principle of resistance is universal in the field of 
production. Numerous indirect agents must work to- 
gether to produce wealth. Now that all agents are sub- 
ject to resistance, it follows that there are no definitely 
fixed and limited factors of production. In other words, 
the productivity of any factor varies as the other coop- 
erating factors with it are varied. The adjustment of 
various factors to each other in a productive enterprise 
must be worked out upon the general principle of resist- 
ance. 

The dynamic problem which these economists con- 
ceived was one of progress, one in which the law of 
substitution was ever present. Properly to adjust factors 
to one another and to adjust the whole establishment 
to the extent of the market are problems inseparable 
from the principle of substitution. The cause of sub- 
stitution is the elastic limit of the productivity of an 
agent, the increasing resistance encountered in augment- 
ing the returns from a factor. The basis of the idea 
of substitution which pervades the writings of the Amer- 
ican economists under review, is the principle of pro- 
portionality. No economist reviewed has denied "the 
law of diminishing returns" in the sense in which 
Ricardo conceived this law. Those critics who have 
given a contrary impression have, without realizing it, 
made the common shift from static conditions on a lim- 
ited area to dynamic conditions covering the whole 
industry over a long period of time. 



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INDEX 



INDEX 



American economists : environ- 
ment of, 4, 5, 110-113; view- 
point of, 4. 

American political economy : 
Bowen's defense of title, 
145-146. 

Author's preface, xv-xvi. 

Bascom, John : chap, viii ; bio- 
graphical sketch, 159-160; 
differences in soil a measure 
of rent, 163; diminishing re- 
turns, 164; economics de- 
fined, 160; margins (exten- 
sive and intensive) equal, 
164; Malthusianism favored, 
160-161 ; population, sum- 
mary of theory, 161 ; Ricar- 
dian rent rarely true, 162; 
rent defined, 162-163, its ori- 
gin, 163, price determined, 
162-163, reasoning on, 162. 

Bibliography, 203-212. 

Bowen, Francis : chap, vii ; bio- 
graphical sketch, 143-145 ; 
children an asset in new 
settlement, 154; criticism of 
Ricardo's theory as appli- 
cable only to England, 155- 
156; diminishing returns, 
156; home market argument, 
157; men, interdependence 
of, 147; laissez faire, con- 
cept of, 146-147; Malthus 
criticized for fallacy of in- 
version, 153; Malthus' the- 
ory applicable to vegetable 
and animal worlds, 150; 
national economist, to be 
classified as, 145; no rent if 
population adequately dis- 
tributed, 156-157; opposes 
Ricardo on rent, 156; popu- 



lation, a giving away of bar- 
barous to civilized peoples, 
151, limited by distribution 
of food, 152-153, need of 
larger, 149-155, not supported 
from soil it occupies, 152, of 
Belgium cited, 150-151, the- 
ory of summarized, 154-155 ; 
protective tariff desired, 148- 
157; quoted on wealth, op- 
posing Mill, 148-149; rent a 
benefit to all classes, 157; 
value depends on utility and 
labor cost, 148; wealth em- 
bodies immaterial products, 
148-149. 
Burgess, J. W. : estimate of 
Thomas Cooper, 53, 56-57. 

Cannan, Edwin : differential 
concept extended, 14; envi- 
ronment of Ricardo's 
thought, 3-4. 

Capital: defined by Carey, 119, 
120, by Ricardo, 7, by Tuck- 
er, 93 ; demand for (Tuck- 
er), 94; embraces land (Ca- 
rey), 118-119; (Perry), 185- 
187; (Walker, A.), 174; 
instrumental concept of, 38; 
results from saving, 93; 
resume of authors, 193-194; 
returns of uniform, 8; sup- 
ply of (Tucker), 94; value 
concept of, 38. 

Cardozo, J. N. : chap, iv; bio- 
graphical sketch, 75, 75-76 n ; 
Malthusianism opposed, 77 ; 
no-rent land idea opposed, 
78; Ricardian rent opposed, 
77-79; rent, quotation on, 79, 
regarded as profit on capital, 
80. 



2l6 



THE RICARDIAN RENT THEORY 



Carey, H. C. : chap, vi ; bio- 
graphical sketch, 110-115; 
American conditions, influ- 
ence on, 110-112; Carey and 
Ricardo, their theories con- 
trasted, 126-128; capital de- 
fined, 119; confirms dimin- 
ishing returns in Ricardian 
sense, 141 ; contrasted with 
Ricardo on diminishing re- 
turns, 139; cultivation, order 
of from poor to rich soil, 
125-126; diminishing returns, 
his theory interpreted, 128- 
132; land is capital, 118-119; 
opposes Malthus, 116; popu- 
lation self -regulative, 117, 
ultimate check to, 11 7- 118, 
will displace animals, 116- 
117; rent, criticism of Ri- 
cardo on, 123-124, grows less 
as cost of reproduction les- 
sens, 121-122; utility defined, 
119 ; value defined, 120, labor- 
cost of reproduction of, 120; 
wealth defined, 119. 

Carey, Mathew: would endow 
chair in University of Mary- 
land for Raymond, 24 n. 

Clark, J. B. : differential con- 
cept extended, 14. 

Checks to population (Ve- 
thake), 69. 

Colton, Calvin : biographical 
sketch, 47; protective tariff 
defended, 48. 

Contents, xvii-xix. 

Cooper, Thomas : chap, iii ; 
biographical sketch, 53-56 ; 
defends Malthusianism, 53 ; 
defends Ricardian rent, 53 ; 
favored nullification in South 
Carolina, 53 ; population the- 
ory, 58; rent, a defender of 
Ricardian theory, 59. 

Cultivation, from poor land to 
rich (Carey), 125-126. 



Differential profits, 14; Tuck- 
er's view on, 95. 

Differential : applicable only to 
land, 13-14; concept extend- 
ed, 14. 

Diminishing returns : applica- 
ble to capital, 15; Cannan's 
error as to Malthus' use of, 
14; Carey and Ricardo con- 
trasted on, 139; interpreta- 
tions of Carey on, 128-132; 
Malthus' use of, 14; Perry's 
mistaken concept of, 188- 
190; Ricardo's theory not 
denied by Carey, 140-141 ; 
Ricardo's treatment of, 14; 
static and dynamic, differ- 
ent species, 139; static in 
agriculture, dynamic in ma- 
chinery (Bascom), 164-165; 
Tucker's view on, 104; value 
related to, 14; Vethake's 
view of, 72, 81, 82. 

Dunbar, C. F. : classifies Phil- 
lips erroneously, 39-40 n; 
estimate of Wayland's eco- 
nomics, 61 ; quoted on Bow- 
en, 144. 

Earth, the source of wealth, 26. 

Economics : defined by Bas- 
com, 160, by Perry, 181, 185 ; 
little written on, the decade 
previous to the Civil War, 
144; neglected by American 
colleges, 5 ; treated as an art, 
145-146. 

Elder, Wm. : estimate of Ca- 
rey, 113-114, US- 
England : poverty of due to 
faulty distribution, 25. 

English economists : environ- 
ment of, 5. 

Everett, A. H. : chap, ii ; bio- 
graphical sketch, 31, 31-32 n; 
criticism of Malthusianism, 
32-33 ; ratios of food and 
population, 33-34. 



INDEX 



217 



Fetter, F. A.: differential con- 
cept extended, 14; introduc- 
tion, vii-xiv. 

Franklin, Benjamin: influence 
on Phillips, 44. 

God's gift of land never valu- 
able (Perry), 183. 

Gray, S. : larger population de- 
sired, 38-39- 

Hobson, J. A. : differential con- 
cept extended, 14. 

Interdependence of men (Bow- 
en), 147- 

Introduction by Fetter, F. A., 
vii-xiv. 

Labor : a measure not a cause 
of value, 89; by slaves must 
disappear (Tucker), 93; defi- 
nition of, 7; the cause of all 
wealth, 27. 

Laissez faire, Bowen's concept 
of, 146-147. 

Land: as capital, 118-119; cap- 
italized according to rate of 
profits (Tucker), 93-94; defi- 
nition of, 7; inequalities a 
measure not a cause of rent, 
13; is capital (Wayland), 62. 

Land-supply concept, 130, 133, 

134- 

Lauderdale, Lord : cited, 36. 

Law of proportionality, 10-12. 

Leslie, T. E. : estimate of Ca- 
rey, 114. 

Limited returns : a static con- 
cept, 106; and habit of con- 
sumption, 106-107; Patten's 
idea of, 105 ; Tucker's idea 
of, 104-105; Wayland's idea 
of, 66. 

Livermore, C. H. : quoted on 
Carey, 115. 

Machinery: its effect on rent, 
30. 

McVickar, John : chap, iii ; bio- 
graphical sketch, 51 ; edited 
McCullock's encyclopedic ar- 
ticle, 52; margin price-deter- 



mined, 52; rent no part of 
cost, 52. 

Mal-adjustment of factors: in 
England and United States, 
5-6. 

Maltho - Ricardian theory : 
American writers, regard 
for, 4. 

Malthus: criticized by Tucker, 
88-89. 

Malthus, T. R. : criticized, by 
Gray and Phillips, 38-39, by 
Raymond, 24; fallacy of in- 
version (Bowen), 153; op- 
posed by Carey, 116; rent, 
defined as national wealth, 
17, theory of, 99 n. 

Malthusianism : a "libel on 
Providence," (Colton), 48; 
favored by Bascom, 160-161 ; 
opposed by Cardozo, yy, by 
Walker, A., 170-172; theory 
applicable to vegetables and 
animals (Bowen), 150; why 
popular, 26. 

Margin : lowering of, means 
fall in wages (Tucker), 91; 
price-determined, 13, 162- 
163 ; equality of extensive 
and intensive (Bascom), 164. 

Marshall, Alfred : quoted on 
American conditions, 112. 

Newman, S. P. : chap, iii ; bio- 
graphical sketch, 59; popu- 
lation, 59; rent, a part of 
cost, 60, defined, 60. 

No American rent problem 
(Colton), 48. 

No-rent land idea opposed 
(Vethake), 78. 

No-rent margin extended, 10. 

Patten, S. N. : limited returns, 
105. 

Perry, A. L. : chap, ix ; bio- 
graphical sketch, 179-181; 
capital embraces land, 185- 
187 ; cost - of - reproduction 
theory of value contrasted 



2lS 



THE RICARDIAN RENT THEORY 



with Carey's idea, 185; di- 
minishing returns, mistaken 
views on, 188-190; econom- 
ics defined, 181, 185; God's 
gift of land never valuable, 
183 ; indebted to Bastiat, 180- 
181 ; population theory sum- 
marized, 182-183 ; Ricardo's 
dififerential rent denied, 187; 
value defined, 181-182, of 
land determined by cost of 
reproduction, 184 ; wealth 
omitted from book, 181. 

Phillips, Willard : chap, ii ; bio- 
graphical sketch, 35, 35-36 n ; 
a national economist, 36; 
capital defined, 38; criticizes 
Malthus, 38-39; tariff, fa- 
vored, 38; value subjective, 
37- 

Population : a statistical theory 
(Tucker), 87-88; barbarians 
supplanted by civilized peo- 
ple, 151 ; Bowen's theory of, 
summarized, 154-155; chil- 
dren in new settlement an 
asset (Bowen), 154; Coop- 
er's view on, 57-58; depends 
on capital, 62; desire of in- 
crease in, 30; example of 
Belgium cited on (Bowen), 
150-151 ; increases with im- 
provement in husbandry 
(Tucker), 90; limited by 
distribution of rather than 
amount of food, 152-153; 
need of augmenting, 32-34; 
need of larger, 149-155 ; 
Newman on, 59; no-land- 
rent if properly distributed 
(Bowen), 156-157; not sup- 
ported on soil it occupies 
(Bowen), 152; regulated by 
wages (Vethake), 68; rent 
problem "our heritage of 
woe" (Bowen), 155; resume 
of authors on, 194-197; self- 
regulative (Carey), 117; 



summary of Bascom's the- 
ory, 161 ; theory of Perry 
summarized, 182-183 ; ulfi- 
mate check to (Carey), 117- 
118; varies inversely as dens- 
ity (Tucker), 88; views of 
Ware, N. A., 45-50 ; will dis- 
place animals, 116-117. 

Poverty in England a result of 
faulty distribution (Walker, 
A.), 171-172. 

Price : determined by cost, 9. 

Price-determined margin, 52. 

Productive agent, nature of, 
10-12. 

Productive factors, their sup- 
ply elastic, 138; valueless 
apart from one another, 10- 
12. 

Profits : criticism of Ricardo 
on (Tucker), 95-96; Tucker's 
three ideas of, 96. 

Proportionality: 135-139; a 
physical law, 11-12; Bas- 
com's idea, 164; Bowen's 
idea, 156. 

Protective tariff : advocated by 
Bowen, 148-157. 

Quasi-rent (Tucker), 94. 

Rae, John: criticism of Mal- 
thus, 47. 

Raymond, Daniel : chap, ii ; 
biographical sketch, 22, 22- 
23 n; classified land as cap- 
ital, 29; earth the source of 
wealth, 26; labor the cause 
of all wealth, 27; machinery, 
effect on rent, 30; Malthus 
criticized, 25 ; population de- 
sires increase in, 30; pro- 
ductive capacity, 23; produc- 
tive factors, 26; rent and 
interest governed by same 
laws, 29; rent and prices 
governed by same laws, 28- 
29; rent defined, 28; scope 
of Political Economy, 24; 
strong central government 



INDEX 



219 



favored, 24; tariff his chief 
interest, 23; wages governed 
by supply and demand, 27. 

Real-wages fall when corn 
rises (Tucker), 91-92. 

Rent : a benefit to all classes 
(Bowen), 157; a monopoly 
return, 18; and interest gov- 
erned by same laws, 29; and 
prices governed by same 
laws, 28-29 ; a product of 
fixed capital (Walker, A.), 
174; and profits obey same 
laws (Tucker), 94; Carey's 
criticism of Ricardo on, 123- 
124; commodity-rent, 16; 
conflicting definitions of by 
Ricardo, 20; confused con- 
cept of (Vethake), 72; 
Cooper's views on, 59; de- 
fined by Bascom, 162-163, 
by Newman, 60, by Phillips, 
40, by Raymond, 28, by Ve- 
thake, 71, by Walker, A., 173 ; 
differences in soil a measure 
of (Bascom), 163; enters 
into cost, 10-12; enters into 
price (Wayland), 62; equiv- 
alent to profits on capital 
(Perry), 187; forces equal- 
izing (Phillips), 42; four 
elements of (Walker, A.), 
175-176; grows less with im- 
provement (Carey), 121-122; 
increased by land improve- 
ment (Tucker), 100; its 
origin (Bascom), 163; no 
part of cost, 8, 52, 72; not 
dependent on differential 
(Senior), 103-104; not ele- 
ment in cost demonstrated, 
8-9; regarded as profits on 
capital, 80; resume of au- 
thors, 197-201 ; Ricardo's 
definition of, 16; Ricardo's 
theory criticized by Tucker, 
102-104 ; theories of Ricardo 
and Phillips contrasted on. 



41-44; the product of nat- 
ural agents (Bascom), 162; 
uniform under competition, 
13; views on summarized by 
Walker, A., 175. 

Resume of authors, chap. y. 

Ricardo, David: capital, re- 
turns of uniform, 8, two 
meanings of, 8; classification 
of productive factors, 7; 
criticism of landlord class, 
17; criticizes Malthus' opin- 
ion that rent is addition to 
national wealth, 17; defini- 
tion, of capital, 7, of labor, 
7, of land, 7, of rent, 16-18, 
of rent conflicting, 20; dif- 
ferential applicable only to 
land, 13-14; diminishing re- 
turns and rent, 14; diminish- 
ing returns applicable only 
to land, 15, applicable to 
capital, 15; distribution the- 
ory summarized, 89; free 
trade a deduction from rent, 
19-20; opposed duty on im- 
portation on corn, 20; price 
determined by cost, 9; rent, 
a creation of value, 19, a 
monopoly return, 18, as na- 
tional wealth, 18-19, a sur- 
plus, 8, criticized by Phillips, 
40, not a cost demonstrated, 
8-10, not a cost of produc- 
tion, 8, theory of criticized 
by Carey, 123-124, theory of 
static, 13 ; theories applicable 
only to England (Bowen), 
155-156; theory of value, 6; 
wage theory opposed by 
Tucker, 91-92. 

Ricardo and Carey: their the- 
ories contrasted, 126-128. 

Ricardian rent : opposed by 
Cardozo, 77-79; rarely true 
(Bascom), 162; tariff advo- 
cates favor, 191. 



220 



THE RICARDIAN RENT THEORY 



Senior, N. W. : quoted on 
American conditions, in J 
rent not dependent on differ- 
ential, 103-104. 

Sidgwick: criticism of Ricar- 
do's rent, 16-17 n. 

Smith, E. P.: disciple of Ca- 
rey, 141-142. 

Specific productivity, 12. 

Substitution: its place in pro- 
portionality, 136. 

Tariff: advocates favor Ricar- 
dian rent, 191 ; favored, 38 ; 
relation to rent, 19-20. 

Tax: incidence of on rent, 12- 

Tendency: in population the- 
ory, 69-70. 

Theories of Ricardo and Carey 
contrasted, 126-128. 

Thompson, R. E. : disciple of 
» Carey, 142 ; estimate of Ca- 
rey, 114. 

Tucker, George: chap, v; bio- 
graphical sketch, 83-84; cap- 
ital, demand for, 94, defined 
as valuable products, 93, re- 
sults from saving, 93, supply 
of, 94; criticism of Malthus, 
88-89 ; differential profits, 95 ; 
diminishing returns, 104 ; 
labor by slaves must disap- 
pear, 93; limited returns, 
104-106; population a statis- 
tical theory, 87-88, increases 
with improvement in hus- 
bandry, 90, varies inversely 
as density, 88; profits, criti- 
cism of Ricardo on, 95-96, 
three ideas of, 96; quasi- 
rent, 94; real-wages fall if 
price of corn rises, 91-92; 
rent a contractual payment, 
96-100, and profits obey same 
laws, 94, increased by land 
improvement, 100, Ricardo's 
theory criticized, 102-104, 
theory patterned after Mal- 



thus, 96-100; theories sum- 
marized, 100-102; value de- 
fined, 85-87, measured, not 
caused by labor, 89; wages 
as related to mode of con- 
sumption, 90. 

Utility: defined, 119; of man 
(Carey), 120-121. 

Value : cost - of - reproduction 
theory of Carey and Perry 
contrasted, 185 ; defined by 
Perry, 181-182, by Tucker, 
85-87 ; depends on utility and 
labor-cost (Bowen), 148; 
determined by labor-cost, 62 ; 
exceptions to Ricardo's the- 
ory, 6-7 n; influenced by 
labor or other causes affect- 
ing supply, 89; labor-cost of 
reproduction (Carey), 120; 
measured, not caused by 
labor (Tucker), 89; not con- 
ferred by nature (Walker, 
A.), 173-174; of factors, 
how determined, 12; of land 
determined by Cost of re- 
production (Perry), 184; of 
land due to human effort 
(Perry), 183; of man (Ca- 
rey), 120-121 ; resume of 
authors, 192-193; subjective, 
37. 

Vethake, Henry : chap, iii ; 
biographical sketch, 67-68 ; 
checks to population, 69; 
diminishing returns, 72, 81, 
82; influenced by McCul- 
lock, 68; population regu- 
lated by wages, 68; rent, 
confusion on, 72, defined, 71, 
no part of cost, 72; "tend- 
ency" in population theory, 
69-70. 

Wages : and proportionality, 
89-90; as related to mode of 
consumption (Tucker), 90; 
governed by supply and de- 
mand, 27. 



INDEX 



221 



Wage- fund, 63-65. 

Walker, Amasa: chap, viii; 
biographical sketch, 166-170; 
capital embraces land, 174; 
four elements of rent, 175- 
.176; Malthusianism opposed, 
170-172; not disciple of Ri- 
cardo, 177; poverty in Eng- 
land a result of faulty dis- 
tribution, 171-172; rent, a 
product of fixed capital, 174, 
defined, 173, views on sum- 
marized, 175; value not con- 
ferred by nature, 173-174; 
wealth defined, 174. 

Walker, F. A.: differential 
profits, 14 ; quoted on his 
father's (Amasa) career, 
168. 

Ware, N. A. : biographical 
sketch, 45. 

Wayland, Francis : chap, iii ; 
biographical sketch, 60-61 ; 
an estimate of his econom- 



ics, 61; land as capital, 62; 
limited returns, 66; popula- 
tion depends on capital, 62; 
rent, depends on location and 
fertility, 65, enters into price, 
62, 66; value determined by 
labor cost, 62; wage-fund, 
63-65. 
Wealth: defined, 119, as pro- 
ductive capacity, 36-37, by 
Walker, A., 174; includes 
immaterial products (Bow- 
en), 148-149; omitted by 
Perry, 181 ; Raymond's con- 
cept of, 24; resume of au- 
thors, 191. 

West, Sir Edward: diminish- 
ing returns, 14; essay on the 
application of capital to land 
(1815), 14. 

Wilson, Marcius : land classi- 
fied as capital, 72-73 ; dis- 
ciple of Carey, 142. 



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